USD/MXN: Mexican peso recovers further on risk appetite

• US dollar drops across the board as stocks surge.
• Mexican peso up supported by risk appetite.
• USD/MXN still up for the week, significantly off highs.

The USD/MXN is falling on Friday after having the biggest daily gains in a month on Thursday. The dollar jumped following the Russian invasion and peaked at 20.78, the highest level in almost a month. Currently, it is back under 20.50.

Thursday’s panic across financial markets pushed USD/MXN to the highest in almost a month. When stocks started to recover, the pair trimmed gains and closed the day under 20.60. On Friday, the recovery of the Mexican peso continues, supported by the better tone across markets.

The USD/MXN bottomed at 20.37 and is it hovering around 20.45. It is far from the weekly top but still positive, about to post the first gain in four weeks. The short-term outlook looks biased to the upside, particularly if it rises back above 20.50. A slide under 20.30 would expose 20.25 and the February low at 20.15.

Wall Street indices are mixed, and European stocks are up 3% on average. Economic data from the US came in above expectations, helping risk sentiment and not the dollar. In Mexico, the data showed the economy stagnated in the fourth quarter after a 0.4% contraction in the third.

USD/MXN daily chart