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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Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
