USD/MXN rises on risk aversion, as US Treasury yields surged

USD/MXN rebounds from 20-day EMA, trading higher despite Wall Street’s positive sentiment.
China’s real estate troubles, starting with Evergrande, now impact Country Garde, intensifying global concerns.
Upcoming US Retail sales and FOMC minutes eyed, while a light Mexican docket leaves traders tuned to USD dynamics.

Christian Borjon Valencia FXStreet

USD/MXN began the session positively and bounced off the 20-day Exponential Moving Average (EMA) at 17.0040, even though market sentiment improved, as shown by Wall Street turning green. The USD/MXN is trading at 17.0685m, post gains of 0.42%.

Mexican Peso feels the heat as China’s real estate crisis and US economic indicators steer the market

US equities trade mixed during the North American session, while the Mexican Peso (MXN) gets battered on a risk-off impulse that spurred outflows from the emerging market currency towards the US Dollar (USD), as portrayed by the USD/MXN exchange rate. A jump in US Treasury bond yields underpinned the Greenback after the 10-year benchmark note rate touched a multi-year high of 4.20%.

China’s real estate woes, which initially involved Evergrande in 2021, spilled over its largest private developer Country Garde, which failed to pay its bond interest last week. Real estate in China has suffered tumbling sales as tight liquidity conditions triggered a series of defaults.

Aside from this, the US economic docket would reveal Retail sales for July, estimated to show consumers’ resilience, and Fed speakers on Tuesday. By Wednesday, the release of the latest Federal Open Market Committee (FOMC) minutes could shed light on the Federal Reserve’s (Fed) forward path. At the same time, Industrial Production is estimated to print gains.

Across the border, the Mexican docket is light. That would leave traders adrift to US Dollar dynamics and market sentiment. A risk-on is USD/MXN negative, while risk aversion could pave the way for further USD/MXN upside.

USD/MXN Price Analysis: Technical outlook

The USD/MXN daily chart portrays the pair as neutral to downward biased, but buyers stepping in around the day’s low opened the door for a recovery above the psychological 17.0000 figure. Of note, the Relative Strength Index (RSI) turned bullish, suggesting that the USD/MXN could be bottoming at around the 16.60-17.00 range, opening the door for further upside. USD/MXN buyers can gain tracti9on above the May 17 low of 17.4038, followed by the 100-day EMA at 17.4671, after reclaiming the 50-day EMA at 17.1228.

USD/MXN

Overview
Today last price	17.0521
Today Daily Change	0.0497
Today Daily Change %	0.29
Today daily open	17.0024

Trends
Daily SMA20	16.9344
Daily SMA50	17.0559
Daily SMA100	17.4834
Daily SMA200	18.2501

Levels
Previous Daily High	17.1384
Previous Daily Low	16.9515
Previous Weekly High	17.2852
Previous Weekly Low	16.9101
Previous Monthly High	17.3957
Previous Monthly Low	16.6258
Daily Fibonacci 38.2%	17.0229
Daily Fibonacci 61.8%	17.067
Daily Pivot Point S1	16.9232
Daily Pivot Point S2	16.8439
Daily Pivot Point S3	16.7362
Daily Pivot Point R1	17.1101
Daily Pivot Point R2	17.2177
Daily Pivot Point R3	17.297

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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