USD/MXN near 4-month highs as peso remains under pressure on NAFTA

The Mexican peso remains under pressure across the board, although today, is rising modestly against the US dollar. With a new round of NAFTA renegotiations on its way, concerns about the outcome continue to weigh on the peso.

Yesterday, Mexican Secretary of Economy, Ildefonso Guajardo said that Mexico could leave negotiations and affirmed that there is life after NAFTA. The comments from the Mexican official represented an answer to US President Donald Trump provocative comments.

USD/MXN hits 4-month highs

The pair rose yesterday for the fourth-day in-a-row and peaked at 18.84, the highest level since May 18. Today it is retreating modestly and at the moment of writing it trades at 18.70, still, sharply higher form the level it opened the week.

The bullish tone remains intact despite today’s slide. Technical indicators show overbought readings but the general picture is still positive for the US dollar on the short to medium term, however, some corrective moves could be expected, particularly if the pair fails to rise back above 18.75.

To the upside, the strong immediate resistance for USD/MXN is located around 18.90: a break higher would expose 19.00. On the flip side, the area around 18.55 is now a support, followed by the strong 18.40/45 zone. In order to remove the current bullish pressure, USD/MXN needs to drop back below 18.30.