- US dollar drops sharply on Friday against Emerging market currencies.
- USD/MXN posts fourth weekly gain in-a-row.
The USD/MXN reversed sharply on Friday amid a decline of the US dollar against commodity and emerging market currencies. The pair approached 19.70 following an upbeat US jobs report but then turned sharply lower following comments from Fed’s Powell.
It broke below 19.50 for the first time since October and bottomed at 19.37. From the low bounced modestly to the upside and it was about to end the week hovering around 19.40, posting the fifth daily loss out of the last six days and the fourth consecutive weekly decline.
The trend lower in USD/MXN remains intact. The bearish bias prevailed despite the volatile across financial markets seen at the beginning of the week. The Mexican peso was not among the top performers of the week. The main winner was the Brazilian real after the inauguration of Jair Bolsonaro (USD/BRL lost more than 4%) seconded by the South African Rand.
USD/MXN Levels to watch
For the first time in almost three months, USD/MXN fell below the 100-day moving average that stands at 19.55. The mentioned level has become a resistance area, followed by 19.80 and 20.00 (psychological / 20-day moving average).
The 19.40 zone is a strong support area. The Mexican peso needs to break and hold below to clear the way for a bearish extension in USD/MXN. The next barrier is seen at 19.15/20; below attention would turn to 19.00.
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