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  • US dollar rises versus emerging market currencies amid risk aversion.
  • USD/MXN jumps and then pulls back modestly, trimming gains.

The USD/MXN jumped to 21.87 earlier on Tuesday, hitting the highest level in six days and then pulled back modestly, trimming gains. A stronger US dollar amid risk aversion boosted the pair.

Equity prices are falling sharply again in Wall Street. The Dow Jones drops 1.70% and the Nasdaq almost 3%. Crude oil is falling more than 8%. Among currencies, the yen is the best performer, followed by the US dollar. The Colombian peso and the South African rand are the biggest losers.  

USD/MXN Technical Analysis

The Mexican peso still holds a positive bias versus the US dollar, but it needs to break under the 21.45/50 key support are in order to clear the way to further losses. The next target is seen around 21.00, with an interim support at 21.30.

Tuesday’s rally in USD/MXN eased before the critical resistance area located around 21.95: a horizontal level, the 20-day moving average and also a downtrend line. If the pair breaks and holds firm above, it would negate the bearish bias. The next resistance is located at 22.25/30.

USD/MXN daily chart