USD/MXN hits fresh monthly lows but rises back above 18.80

• Mexican peso recovers strength after Friday’s slide versus US dollar.
• USD/MXN keeps testing the 18.80 support area, remains in range. 

The USD/MXN jumped on Friday to 19.03, the highest level in over two weeks amid market tensions on the back of Middle East tensions. Today it reversed and bottomed at 18.79, the lowest intraday level since may. As of writing trades at 18.85, off lows but still in negative territory for the day.

Market concerns ease, US dollar weakens

Market sentiment reversed during the European session and improved, helping the demand for emerging market currencies. Wall Street indexes are now modestly higher, after opening in negative. 

US yields also rebound helping the DXY move off lows. As the greenback recovered ground or stabilized against majors, it printed fresh lows versus some emerging market currencies, like the Mexican peso. 

Levels to watch 

The USD/MXN remains in a consolidation range. On Friday it peaked at 19.02 but failed to hold. The rally found resistance at the 20-day moving average and around the 19.00 zone. 

Currently, the pair is testing the lower bottom of the trading range located at 18.80. If it drops firmly below it will likely test the 2019 low at 18.74. Under that level, the next support is seen at 18.60. On the upside, a close above 19.00 would suggest more strength ahead for the greenback.