USD/MXN prints one-week lows around 20.50

• Mexican peso adds to weekly gains versus the US dollar.
• The greenback continues to correct lower, gains strength after US data.
• Key support in USD/MXN seen at 20.50, resistance at 20.70.

The USD/MXN is falling on Tuesday for the second day in a row, although it moved off lows during the American session. The pair bottomed at 20.50, the lowest since January 24 and then bounced to 20.60 following US data.

Price action continues to be driven by the US dollar. The greenback is correcting lower across the board after last week’s rally. The move to the downside lost momentum following the ISM Manufacturing report as US yields rebounded sharply to the upside. On Friday, the NFP report is due.

Emerging market currencies trimmed gains during the last hours but remain in the positive ground taking into account the last five trading sessions, on the back of the recovery in risk appetite. The performance of the Mexican peso has been below average.

Short-term outlook

The area around 20.50 is a strong short-term support that also contains the 20-day simple moving average. A daily close below could clear the way to more losses, with the following support seen at 20.40 followed by 20.30.

On the upside, the key resistance is located at 20.70 which should limit the upside. If the dollar breaks higher, it could recover the positive bias in the short term. The next key level stands at 20.85.

USD/MXN daily chart