USD/MXN drops modestly as it continues to consolidate near 20.00

• The Mexican peso is modestly higher against the US dollar on Monday and remains in a consolidation range, after last week rally.  
• DXY marginally lower and also down against commodity and emerging market currencies.  

The USD/MXN rose sharply last week but on Thursday and Friday lost strength and pulled back. Today is it trading in the same range of Friday’s American session when it bottomed at 19.88.

Earlier today moved to the upside, finding resistance below 20.15 and then, turned to the downside. Recently dropped to 19.91, hitting a fresh low on the back of US dollar weakness.  

The overall picture for the Mexican peso remains challenging. President-elect Andres Manuel López Obrador is attempting to restore business confidence after last week airport vote. Also, US elections on Tuesday and the FOMC meeting on Wednesday could trigger volatility in MXN.  

Levels to watch  

To the upside, the immediate resistance is now seen at 20.15 (Daily high), above that level, the next obstacle is 20.30: a daily close on top would signal a test of the 20.50 zone.  

On the downside, the 19.85/90 is the first support area followed by the strong 19.65/70 area that should limit the downside. If it consolidates below, the outlook would favor more gains for the Mexican peso with a target near 19.50.