- US dollar jumps across the board, particularly against emerging market currencies.
- USD/MXN ends bearish correction amid risk aversion, volatility on the rise.
The USD/MXN pair rose sharply in a few hours, from near the 23.30 support zone to 24.19 reaching the highest level in six days. As of writing, it trades at 24.10 up more than 3% for the day.
The move to the upside took place amid a rally of the greenback across the board. After falling during five consecutive days, the US dollar strengthened as risk aversion returned. Crude oil drops 3%.
In Wall Street, the Dow Jones is falling 2.75% and the Nasdaq 1.95%. The deterioration in market sentiment affected commodity and emerging market currencies. The Mexican peso is the biggest loser among the most liquid currencies on Wednesday.
Economic data from the US showed larger than expected contractions in industrial production and retail sales during March. The economic numbers were mostly ignored as market participants continue to focus on the very short-term and the near-term outlook.
Technical levels
The USD/MXN broke above 23.80 and gained further upside momentum. It is hovering around the 20-day moving average. A slide below 23.80 could remove the bullish pressure out of the pair, while if it rises further, the next strong resistance is located at 24.40.
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