- Emerging market currencies rise sharply versus US dollar, MXN the best.
- USD/MXN breaks short-term uptrend line; it could test April lows.
The Mexican peso is up sharply against the US dollar on Friday and it climbed above key technical levels suggesting it could keep rising. The greenback is weaker on the back of risk appetite.
The USD/MXN reached on Thursday the 24.50 area and then turned to the downsides. It recently bottomed at 23.55, the lowest intraday level since April 15. The move lower was driven by the decline of the dollar, and a stronger Mexican peso accreted the slide.
Equity prices in Wall Street are rising more than 1.50% on average, despite the US employment report and even after US President Trump mentioned he is having a “very hard time” with China.
Emerging market currencies are higher on Friday, with most of them adding to weekly gains. The Mexican peso is the best performer over the last five days, accumulating an increase of 3.70% versus the US dollar.
Technical Outlook
The USD/MXN broke an uptrend line, and it is testing the 23.60 area. If it consolidates sunder 23.60 more losses seem likely with a target at 23.20/25 (April lows).
The short-term outlook favours the downside in USD/MXN. A recovery above 23.70 could alleviate the bearish pressure, but the US dollar needs a close above 24.15 to favour more consolidation ahead.
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