USD/MXN drops further below 20.40 as the Mexican peso strengthens

• The Mexican peso is among the top performers on the last day of the year and the best of December.
• USD/MXN extends slide after breaking below 20.45.

The USD/MXN is trading at 20.34, the lowest level since November 10, falling for the fourth consecutive day. The Mexican peso strengthened across the board on the last week of the year and pushed the cross further lower.

Technical factors also contribute to the decline, first with the break of an uptrend line and then with the slide under the 20.45/50 support area. Now USD/MXN is looking at the 200-day simple moving average that awaits at 20.27.

An improvement in market sentiment across global financial markets helped the MXN. The currency was the best performer in December and is about to end the year with small losses versus the US dollar.

The short-term outlook continues to favor the downside, although the daily RSI is approaching 30. So far, no signs of a correction area seen. The area around 20.25/30 should limit the downside and could trigger a rebound to 20.45. If it breaks below, the next support at 20.10 would be exposed.

To remove the negative bias, the dollar needs to rise above 20.90. Before that level, resistance levels are seen at 20.50 and 20.71.

USD/MXN daily chart