- Emerging market currencies are holding gains despite a reversal on Wall Street.
- The bearish momentum of the USD / MXN slows down during the American session, still moving towards the lowest close since the end of March.
The USD / MXN fell below 23.05 earlier on Thursday and fell to 22.74, reaching the lowest level since March 17. In the past few hours, it has cut losses, and is trading around 23.00, down for the day but down.
The decline was triggered by a rally in emerging market currencies against the greenback due to risk appetite. Recently, Wall Street stock prices have been trending lower, and the currency dynamics mentioned have slowed, favoring the rebound of the USD / MXN to 23.00. Despite the greenback’s recovery, the USD / ZAR fell by 1.65% and the USD / BRL by 1.55%. The Mexican peso then came with USD / MXN down 0.89%.
Economic data for the United States showed improvement in May compared to April, but still showing a strong recession. Initial claims fell, however, remaining above two million while the Markit PMI Composite recovered to 36.9 in May from 26.7 in April (above expectations), but still well below the level of 50. Market players have mostly ignored the numbers.
The USD / MXN could not consolidate below 22.80 and rebounded at 23.00, as a normal correction. On the upside, the resistance is observed at 23.05 followed by 23.25 / 30. The bias will continue to point down as long as the pair remains below 24.10.
On the downside, below 22.80, the next support is around 22.45 followed by 22.10.