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  • Mexican peso rises gains US Dollar for the second consecutive day.  
  • USD/MXN short-term outlook back to neutral/bearish.

The Mexican peso rose against the US dollar and reached the highest level in a week boosted by an improvement in the sentiment toward most emerging markets. Today the Turkish lira rose more than 1.5% and the Brazilian real 1%. The worst performer was the Argentinean peso that lost 2.5% after a new deal with the IMF and the announcement of a fixed trading range.  

The USD/MXN bottomed at 18.74, the lowest in a week and then bounced to the 18.80 area, where it was trading near the end of the session, also close to September lows. The peso gained against the US dollar for the second day in a row despite the rate hike from the Federal Reserve. Next week, the Bank of Mexico will decide on monetary policy. Most analysts expect no change after in rates, but a minority see a rate hike to 8.0%. An improvement in inflations expectations and the stabilization of the exchange rate, removed some pressure of the central bank for a rate hike.  

USD/MXN Levels to watch  

The upside was capped by the 19.00 area and the 20-day moving average that stands around 19.02. A daily close on top is needed in order to clear the way for a leg higher. But the daily chart shows USD/MXN with a modest bearish bias, still consolidating above the key support seen at 18.70.  

If the pair holds under 18.80, a test of 18.70 could be seen. A break lower would signal more losses ahead and a test of 18.50. The barrier at 18.45/50 is likely to cap the decline and favor a rebound.