USD/MXN rises further to three-month highs near 21.50

• Risk aversion keeps pushing USD/MXN higher.
• Dollar rises for the fourth consecutive day versus Mexican peso.

The USD/MXN is rising for the fourth consecutive day and reached at 21.46, the highest level since early December. It remains near the highs, with the bullish momentum intact.

The risk aversion environment across financial markets keeps the USD/MXN momentum. Emerging market currencies are under pressure as equity markets slide. After posting sharp losses on Monday, the Dow Jones is falling 0.52% on Tuesday.

The war in Ukraine continues to be the key driver. It has been reported the Biden administration is about to announce a ban on Russian oil imports and more sanctions. Crude oil prices are up by more than 7% at the highest level since 2008.

Overbought, but who cares?

Technical indicators show overbought readings, but USD/MXN continues to rise with momentum. No signs of exhaustion are seen at the moment. The next resistance levels are seen at 21.50 and then 21.60.

On the flip side, the immediate support stands at 21.25, followed by 20.95/21.00. Below, the next level to consider is 20.80/85. A decline to 20.85 could be seen as a correction, while a consolidation below would negate the bullish bias.

Technical levels