USD/MXN retreats sharply to test 24.30 as Mexican peso soars

• Mexican peso rises across the board after reversing the trend during the American session.
• USD/MXN drops from near 25.00, to test strong support at 24.30.

The Mexican peso reversed sharply on Monday and erased most of its recent losses against the US dollar. Earlier on Monday, USD/MXN hit a weekly high at 24.89. After moving for hours in the 24.88/24.60 range broke to the downside and tumbled to 24.29.

As of writing, USD/MXN is testing the 24.30 area, a key short-term support that if broken should strengthen the Mexican peso. The currency is among the top performers across the board at the beginning of the week, despite risk aversion.

Mexico: Record low PIM in April

Data released on Monday showed a decline from 47.9 in March to 35.0 in April of the HIS Markit Mexico Manufacturing PMI. The index pointed to further deterioration in business conditions faced by goods producers. It was the lowest reading since records began in 2011.

"March PMI data suggested that the Mexican manufacturing sector had been relatively sheltered from the negative effects of the coronavirus pandemic, but that wasn't the case in April”, said Eliot Kerr, Economist at IHS Markit.

In a different report, the Bank of Mexico informed that remittances to Mexico hit a new record high, after jumping 36% in March from a year earlier, ending the first quarter up by 18%.