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  • US dollar rises sharply against emerging market currencies, particularly in Latin American.  
  • Outlook favors further gains in USD/MXN.  

The Mexican peso is about to post the second lowest daily close in two months against the US dollar. The USD/MXN rose back above 19.30 and managed to hold on top. Recently it reached levels above Monday’s highs, hitting the strongest since February 15 at 19.399.  

As of writing it trades at 19.36, keeping most of the day’s gains. The main driver has been US dollar strength. The greenback rose against emerging market currencies and particularly versus Latin American. The Argentine peso (-2.15%) and the Brazilian real (-1.40%) are the worst performers.  

US data released today was mostly ignored by markets that continue to await details on US-China negotiations. The ADP report showed private jobs rose by 183K in February, slightly below expectations while the trade deficit widened in December to the highest in years. The next key release will be on Friday with the official employment report. In Mexico, inflation data is due tomorrow.  

USD/MXN Technical outlook  

A daily close on top of 19.30 would strengthen the bullish case for the US dollar, signaling a test of February highs at 19.47. The next area of resistance is seen around 19.40/45, followed by 19.60.  

A slide back below 19.30 would remove the positive momentum and point to a continuation of the range between 19.20 and 19.30. A close below 19.10 will likely lead to further gains for the Mexican peso, exposing 19.00 and also January lows (18.85/87).