USD/MXN hits new 2018 high at 19.69 and retreats

• Mexican peso erases daily losses after falling to a new 2018 low against the US dollar..
• USD/MXN bullish tone remains intact, at the moment moving in the 19.50/70 range

The Mexican peso is rising marginally against the US dollar after being unable to recover from fresh multi-month lows. Emerging market currencies started to decline weeks ago and accelerated during the last few days. They remain under pressure.

Today, the USD/MXN pair peaked at 19.69, the new high for the current year.  Then pulled back finding support at 19.50. Late in NY, was trading at 19.55, unchanged for the day on what could be a positive signal after for the Mexican peso, taking into account that USD/MXN rose sharply during the previous three sessions (+3%). An improvement in risk appetite or a correction of the US Dollar could help ease the pressure.

From a technical perspective, the uptrend remains intact. The pair could start trading in the range between 19.70 and 19.50. A break higher could clear the way for a test of 19.90 while to the downside, under 19.50, the next strong support might lie at 19.30.

Banxico next week

The central bank of Mexico will held its board meeting next week. The rally of the USD/MXN is likely to be the main theme. “Recent Mexican peso (MXN) weakness once more puts Banxico on alert to raise policy rates again on 17 May (by 25bps). Currency volatility is central to Banxico’s reaction function and the rise in breakeven rates since April is unlikely to go unnoticed”, said Mike Moran, Chief Economist, at Standard Chartered.