- USD/MXN testing critical support at 22.20 that protects 22.00.
- Mexican president presents a reform to the pension system.
The USD/MXN pair dropped to 22.18, reaching the lowest level since July 6 and then rose back above 22.20. As of writing, it trades at 22.23 falling for the third day in row and pressuring a critical support at 22.20.
Price action in USD/MXN continues to be driven by a weaker US dollar across the board. The improvement in risk sentiment boosted the demand for riskier assets. Hopes about a COVID-19 vaccine and the EU recovery fund, are among the factors keeping the rally going.
The Brazilian real is the best performer with USD/BRL falling 1.30%, followed by the Russian ruble with USD/RUB down 0.80%.
In Mexico, President Andrés Manuel López Obrador announced a pension reform project. So far the reaction has been positive. Mexico’s IPC is up almost 1% and the MXN printed fresh highs versus the dollar during the last hour.
Levels to watch
The USD/MXN is testing the 22.20 area. A consolidation below would clear the way to more losses, targeting 22.00/05. Below support levels are seen at 21.90 and 21.55. If the pair rebounds above 22.25, the bearish pressure should ease favouring a bullish correction. The key resistance is seen at 22.55/65 (20 and 55-DMA, horizontal levels and downtrend line): a close above would clear the way to further gains and a test of 23.00.
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