USD/MXN well supported by the 18.80 zone

• Mexican peso remains firm, near multi-month highs.
• USD/MXN on a consolidation mode, between 18.80 and 19.15.

The Mexican peso is about to end the day unchanged against the US dollar as it continues to trade near the highest level in months. The greenback dropped today versus most Emerging Market currencies amid some improvement in risk appetite and a modest retreat in US yields. Also, the recovery of the yuan helped.

The USD/MXN pair dropped earlier today to the key 18.80 area. It bottomed at 18.78, the lowest in six days and bounced to the upside. It was hovering around 18.90.

Mexico’s President-elect Andrés Manuel López Obrador (AMLO) asked US President Donald Trump to seek a quick agreement on NAFTA to avoid the consequences of the uncertainty. Yesterday, Trump mentioned that he spoke with AMLO and added: “We’re talking to them about doing something very dramatic, very positive for both countries”. No specific details were provided.

USD/MXN Technical outlook

The pair is consolidating between 19.15 and 18.80. The area around 19.15 is a key resistance, consistent of relevant moving averages, a downtrend line and also a horizontal level. A break higher is likely to trigger a quick rally to 19.30. Above, the next resistance is seen at 19.50.

On the flip side, the 18.80 zone holds the key to more losses. The pair needs to post a daily close significantly below in order to open the doors to more losses. Potential targets are seen at 18.70, 18.60 and 18.45.