USD/MXN drops to test 24.00, Latin American currencies outperform

• Mexican peso continues on recovery mode versus the greenback. 
• US dollar falls across the board on risk appetite. 

The USD/MXN is falling on Wednesday for the second day in a row. Earlier it rose to 24.78 (two-day high) but then reversed sharply. As of writing, it trades at 24.01, at daily lows. The bearish momentum intensified after the beginning of the American session and over the last minutes as Wall Street extends gains. 

The report that Bernie Sanders will announce he is pulling out of the Democratic presidential race, boosted US stocks further. The Dow Jones is up 2%. The vulnerable improvement in market sentiment continues to be positive for emerging market currencies like the Mexican peso. 

The key driver in USD/MXN slide is the weaker greenback. The biggest gainers on Wednesday are the Chilean peso followed by the Brazilian real. Latin American currencies are outperforming. 

Technical outlook 

The USD/MXN is about to test the 24.00 zone. On Tuesday it dropped to 23.81 but it was rejected from under 24.00. The negative short-term bias continues to point to the downside. A consolidation below 23.95, a slide to 23.70 seems likely; below the next target stands at 23.40/45. 

On the upside, above 24.45 the greenback should gain momentum while a recovery surpassing 24.70 would see 25.00 back in the radar.