USD/MXN remains above 20.60 amid volatile markets

• Second day of gains in Wall Street weighs on USD/MXN.
• Mexican peso’s upside seems limited on the current environment.
• Mixed data from the US on Thursday, NFP due on Friday.  

The USD/MXN is rising modestly on Thursday, hovering around 20.66 on the back of a mixed US dollar. The greenback is being supported by a cautious tone across financial market as the crisis in Ukraine continues.

Wall Street indices are rising for the second day in a row, keeping Mexican peso’s losses limited. Another wave of risk aversion could send USD/MXN toward 21.00. Crude oil prices are having an extremely volatile session. The WTI barrel hit the highest level in more than a decade above 116.00, and then pulled back to as low as 107.69.

Economic data from the US came in mixed. Initial Jobless Claims dropped to the lowest level in eight weeks, while the ISM services PMI fell unexpectedly to 56.5 from 59.9. The employment component of the ISM services dropped to 48.5 from 52.3 and the Price Paid rose to 83.1. On Friday, the US official employment report is due.

Short-term outlook

The USD/MXN holds a bullish tone, although it failed to post a daily close above the 20.70 area on Wednesday. If the dollar manages to rise back and consolidate above 20.70, it would clear the way for a test of the following critical resistance at 20.85/90, the last defence to 21.00.

On the flip side, the 20.45/55 band is currently offering support to USD/MXN. A break lower would negate the short-term negative bias.

Technical indicators show the RIS moving north, supporting the upside, while Momentum is flattening still in positive ground.

USD/MXN daily chart