USD/MXN holds bullish tone, near 19.30
- Mexican peso recovers modestly against the US dollar; technicals still show it vulnerable.
- A decline across the board of the greenback and higher crude oil prices kept USD/MXN below 19.30.
The USD/MXN broke yesterday a multi-day range above 19.15 and jumped to 19.32, reaching the highest level in a month. Today pulled back to 19.20 and rebounded back above 19.25. As of writing trades at 19.26, marginally lower for the day and close to the 19.30 zone.
The improvement in the tone around financial markets helped the Mexican peso. “There is a positive tone on the financial markets after the announcement from US lawmakers of a potential deal that includes some funding for the border. This has somewhat allayed fears over another partial government shutdown ahead of this Friday’s deadline. Moreover, there is a positive sentiment on the US-China trade relationship ahead of the resumption of high-level talks later in the week. On another front, Brexit negotiations continued to be uncertain”, said BBVA analysts. US President Trump just said he was “not happy” with the border security deal but so far, did not mention whether he would veto it.
BBVA analysts added that “Latam countries benefited the most from the rise in crude oil prices (reaching levels above $62 per barrel) due to reports showing a potential additional cut in crude oil production by Saudi Arabia”. The Brazilian real is so far the best performer. The WTI barrel is up 2.05% at $53.50.
USD/MXN Levels to watch
After breaking yesterday the key 19.20 and after completing a pullback to that level today, the USD/MXN appears to be ready for a test of 19.30. A close above 19.30 would point to further gains, targeting 19.45.
The bias points to the upside but a slide significantly back below 19.20 would weaken the US dollar and could lead to a test of 19.00. The key support below is the 18.85/87 zone (January lows).