USD/MXN drops to monthly lows under 19.90
- Mexican peso holds onto weekly gains versus the US dollar.
- Emerging market currencies resist the wave of risk aversion well.
- USD/MXN heads for the third weekly decline in a row.
The USD/MXN dropped further on Friday and bottomed at 19.84, the lowest level in a month. It then trimmed losses and climbed toward 19.90 as Wall Street turned negative.
Emerging market currencies resisted the wave of risk aversion so far but the negative tone across financial markets remains a great risk. More tensions could hit not only emerging markets' assets but also their currencies.
Wall Street indices opened positive on Friday and then changed their course. The Dow Jones is falling by 0.71% and the S&P 500 drops by 0.63%. The move pushed USD/MXN back to the 19.90 area.
A daily close below should keep the negative momentum intact, with scope for a test of the next support at 19.80. The next level to watch is seen at the April low at 19.72.
If the US dollar manages to recover above 19.90 it would alleviate the bearish bias. The next critical resistance stands at 20.05. If USD/MXN rises above the 20-day Simple Moving Simple at 20.20, it would negate the bearish short-term outlook.
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