USD/MXN falls below 18.80, hits lowest level in 12 days
|- Mexican peso gains ground in the market amid NAFTA hopes.
- USD/MXN holds below 18.80 and tests 20-day moving average.
The Mexican peso is among the top performers on Wednesday on the back of expectations that a deal is close regarding the North American Free Trade Agreement (NAFTA). The USD/MXN pair is testing the daily low at 19.74 and is headed toward the lowest close since August 8.
“Mexico’s new President, Andres Manuel Lopez Obrador (AMLO), has restarted talks with the USA on the North American Free Trade Agreement. US and Mexican officials have particularly covered how much North American content should be included in cars. According to both Jesus Seade (negotiator of AMLO) and Ildefonso Guajardo (current Economy Minister), negotiation are making good progress. Completion is expected by the end of the month or mid-September latest. A second phase of discussions will focus on agriculture”, said Vincent-Freìdeìric Mivelaz from Swissquote. According to them, a completion of the talk phase between the US and Mexico, could lead to an appreciation of the Mexican peso and send USD/MXN to the 18.45 range.
Key levels to watch
Earlier today it approached 19.00 but only to turn to the downside. The bearish bias remains intact and could gain momentum with a close under 18.80. Support levels are seen at 18.74 (20-day moving average) followed by the 18.70 area and 18.50.
To the upside, the key level to watch is the 19.00 area, a horizontal level and also where a downtrend line stands. A break higher could lead to a stronger US dollar.
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