USD/MXN upside momentum remains strong, hits 2-week highs
- Spot hit highest in two weeks.
- Mexican peso affected by crude oil slide.
- US dollar rises across the board after US jobs data.
USD/MXN gained ground for the second day in a row and extended the rally to 18.90, the highest level in two weeks. Near the end of the session, it was hovering around 18.85, headed toward the highest close since November 20.
The Mexican peso was affected by the slide in crude oil prices. The WTI was losing more than 2% and just printed a 2-week low under $56.00 a barrel. While the greenback rose across the board supported by US data. The ADP employment report showed a gain of 190K in private payroll with a strong creation in the manufacturing sector. Attention now turns to Friday’s NFP.
USD/MXN decline from 19.30 found support at the 18.50 zone, late in November. After moving around 18.60 during days, yesterday it broke to the upside. Today it continued to rally until it found resistance at 18.90. The 2-day up move pushed the price above the 20-day moving average, offering a signal of a potential short-term bottom at 18.44 (Nov 27 low).
To the upside, the immediate resistance is seen at 18.90, above that level a test of 19.00 seems likely. The key level continues to be 19.30 that capped the upside back in October and November, a breakout above could open the door for an extension of the US dollar rally that started in September from 17.60.
On the downside, USD/MXN immediate support is now seen at 18.70, (last week high) and below at the 18.50 area. A consolidating under 18.50 could target 18.30 (September high).