USD/MXN Price Analysis: Mexican peso unable to break under 20.00

• Bearish tone prevails in USD/MXN, downside limited by 19.95/20.00.
• MXN not among the top performers on Wednesday ahead of Banxico.

The USD/MXN is trading modestly lower on Wednesday and continues to press toward the 19.95/20.00 critical short-term support. The 20 and 55-day moving averages are placed on that zone containing a horizontal support and considered a physiological level.

A break under 19.95 could trigger more losses in the very short-term and also volatility. A close below would target the next support at 19.75.  If USD/MXN manages to hold above 20.00, it could rebound. The immediate resistance is located at 20.15, followed by 20.30.

The Mexican peso is rising since last Friday versus the US dollar. It failed to strengthen further during the last session and now is lagging other emerging market currencies, probably because USD/MXN hit a strong support at 20.00.

On Thursday, the Bank of Mexico will announce its decision on monetary policy. The central bank could cut the key rate by 25bp to 4% or remain on hold. The outcome should not have a significant influence on MXN that is more correlated with global risk sentiment.

USD/MXN daily chart