- Mexican peso and emerging market currencies gains versus US Dollar on risk appetite, ECB easing.
- USD/MXN heads for lowest close in a month, below key level.
The USD/MXN pair is consolidating losses during the American session, as it stands slightly above 19.40. Earlier it bottomed at 19.39, the lowest in almost a months.
Risk appetite on optimism about an improvement in the negotiations between China and the US; and later, the easing package from the European Central Bank, boosted the demand for Emerging Market currencies, among them, the Mexican Peso.
More downside ahead?
From the August 29 high, USD/MXN lost now 4% in an impressive rally of the Mexican peso. Technical indicators show extreme readings but no signals of a recovery yet.
A close below 19.45 would point to further losses and to a potential test of the 19.30/35 support level. If USD/MXN drops to 19.30 a rebound later seems likely, but if it breaks lower, the next target is seen at 19.20.
A recover back above 19.50 would ease the bearish pressure. Above the next resistance is seen at 19.60. A consolidation above 19.60 would signal the end of the Mexican peso rally.
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