USD/MXN drops to test 21.00 amid risk appetite
|- The Mexican peso and emerging market currencies rise as Wall Street soars.
- USD/MXN still looking bullish; correction extends to test 21.00.
The USD/MXN is falling for the second day in a row as equity prices rise sharply in Wall Street. The cross bottomed at 20.98, the lowest level in almost a week. So far, it has been unable to confirm a break under 21.00.
The US dollar is falling against emerging market currencies on optimism across markets. The Dow Jones gains 0.91%, and the Nasdaq rises by 0.27%. In Mexico, the IPC index is up 0.59%, at the highest level since 2018.
Market participants await the outcome of a debt auction in the US. Inflation numbers for the US came in line with expectations, with the annual rate reaching 1.7%, the highest since January 2020. After the report, US yields pulled back, weakening further the greenback.
USD/MXN hovering around 21.00
For the Mexican peso to keep recovering, it needs market sentiment to remain positive. A firm break of USD/MXN under 21.00 would target the next support at 20.80. Then emerges the 20.50/55 area, a strong barrier that should contain the pair, boosting a rebound.
If the pair rises back above 21.30, the 21.50 resistance would be exposed. A daily close above would open the doors to more gains.
USD/MXN daily chart
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