USD/MXN drops again, Mexican peso keeps testing the 23.50 area

• Mexican peso remains strong, the top performers over the last seven days.
• USD/MXN heads for lowest close in a month, looking at 23.25/30.

The USD/MXN pair dropped to 23.44, hitting the lowest intraday level since April 15. It then quickly rose back above 23.50 and as of writing, trades at 23.55, down 3.50% from the level it had a week ago.

The Mexican peso continues to outperform and is the biggest gainer of the last seven days among the most traded currencies. The key driver has been the improvement in market sentiment. Wall Street is posting mixed results on Tuesday but is up more than 3% from seven days ago.

A slide of the US dollar also weakened the USD/MXN. Despite the rally of USD/JPY, the DXY drops 0.20%, off lows after bouncing from weekly lows. Economic data from the US released on Tuesday, and Powell and Mnuchin’s testimony were mostly ignored by market participants.

Short-term levels

The USD/MXN bounced from the lows, finding resistance at 23.65. The bias will continue to point to the downside as long as it holds under 24.10/20. So far the pair remains supported by the 23.50 area. A consolidation under 23.45 would clear the way toward 23.20.