- The Mexican peso outperformed despite the decline in the US dollar.
- The USD / MXN finds support in the 24.00 area and bounces.
The USD / MXN rebounded higher after reaching 24.00 and is back in the area of 24.30. Risk aversion weakened the Mexican peso which erased all gains against the greenback.
After stock prices on Wall Street resumed a fall, the USD / MXN returned higher. The Dow Jones lost 2.18% and the Nasdaq 2.20%. US yields decline despite comments from Fed Powell against negative rates.
Despite losing ground against the greenback, the Mexican peso outperformed on Wednesday. The best of the emerging markets is the Chilean peso (USD / CLP down 0.90%) while the worst the Colombian peso (USD / COP + 0.70%).
In Mexico, attention is turning to the central bank, which will announce its decision on monetary policy on Thursday. A rate cut of 50 bps is expected. “We see MXN remaining under fundamental pressure, however, the extent to which Banxico surprises with the size of the easing or with an accommodating tone at the May meeting could have a negative impact on the peso in the short term,” explained the TD Securities analysts.
The pair continues to make higher highs and lows, a bullish sign. A consolidation above 24.35 should open the doors for a test of 24.50. On the lie side, the 24.00 area is the immediate support and a lower breakout would target 23.80. The next support emerges at 23.50.