USD/MXN drops to four-week lows below 20.00 amid risk appetite

• Mexican peso continues to rise versus the US dollar as markets recover.
• DXY extends bearish correction, and suffers the worst daily loss in months.
• The slide below 20.00, weakens further the USD/MXN pair.

The USD/MXN is falling on Tuesday for the sixth consecutive day. It bottomed at 19.92, the lowest level since April 19 and then rebounded toward 20.00.

The Mexican peso continues with its rally versus the US dollar for the sixth consecutive day. It reached the highest level in almost a month. The MXN has been among the top performers during the last five days, after a new rate hike from Banxico.

The improvement in risk appetite across financial markets seen during the last few days pushed USD/MXN further to the downside. Also weakened by higher crude oil and commodity prices. The US Dollar Index is falling for the third consecutive day, posting on Tuesday so far the worst decline in months. The greenback trimmed losses after the release of US economic data that came in above expectations.

April lows back on the radar

The consolidation below 20.00 could open the doors to a slide toward the next support area at 19.85 in USD/MXN. A slide below would expose the April low at 19.72. A weekly close clearly under 19.70 would strengthen the medium-term outlook for the Mexican peso.

If the dollar recovers above 20.00, it would alleviate the bearish pressure. Above the next resistance stands at 20.07, followed by 20.22. The critical resistance remains 20.45: a consolidation above would target the 20.70 zone.

USD/MXN daily chart

Technical levels