USD/MXN retreats from record highs, remains near 25.00

• Mexican peso favored by improving risk appetite across financial markets. 
• USD/MXN corrects lower, but remains near all time highs. 

The USD/MXN peaked during the Asian session at 25.44, reaching a new record high and then pulled back. The correction from the top found support at 24.60 and it climbed to 25.20. As of writing trades at 24.90, about to end the day lower but still holding a bullish tone. 

The improvement in risk sentiment boosted equity prices and the demand for emerging market assets. The Dow Jones rose 11% and the S&P 5000 9.30% as volatility remains at extreme levels. Expectations about the US Congress approving the stimulus package. It was the best day for Wall Street in more than eighty years. 

Economic data from the US showed a decline to a record low in the Markit PMI service sector (39.1) while the manufacturing index dropped to 49.2. US President Trump said on Tuesday he wants the US open by easter. 

Domestic situation adds to MXN weakness 

Over March, the Mexican peso continues to be the worst performer in the currency market. The coronovirus panic that hit markets, affected particularly the Mexican peso. The domestic situation added to the weakness in MXN. 

Mexican President Lopez Obrador’s strategy to control the coronavirus created concerns. More recently, a referendum in Mexicali showed voters rejected a brewery built by Constellation Brand Inc. The new vote reminds the airport referendum back in 2018. Both damaged investors confidence.  "They have to respect the decision of the people. I think (Constellation) will understand when there is a result like this one," said President Lopez Obrador.

Technical levels