USDMXN is under selling pressure for one more day as the correction from recent highs accelerates below the 50-day moving average. U.S. dollar is under selling pressure today as the risk-on sentiment returns to markets amid the reopening of the businesses across the globe. The Mexican peso is getting a boost from higher crude oil prices.
On the data front, the U.S. MBA Mortgage Applications came down to -2.6% for May 15; the previous reading was at 0.3%. Yesterday, the U.S. housing starts and building permits dropped in April to the lowest levels since 2015. The Housing Starts came down -30.2% in April. The Building Permits Change came down to -20.8% in April from -6.8% in March.
Last week, Banxico decided to cut the interest rates by 50 basis points to 5.5% as was expected by markets. The central bank of Mexico also said that the risks are to the downside amid the coronavirus outbreak. Banxico is open to any further interest rates adjustment as it continues to monitor the coronavirus impact on the economy. Meanwhile, Fed Chairman Jerome Powell rejected the negative interest rates scenario in his latest speech.
USDMXN is 1.19% lower at 23.3980 as the pair now breaches below the strong support base that formed since mid-March and tested the last three months successfully giving a rebound. On Monday, the pair also breached below the 50-day moving average, and the short term momentum is bearish for the pair. The long term picture remains bullish as long as the pair trades above the 100-day moving average.
On the downside, now the first support for USDMXN will be met at 23,3429 today’s low. The next support zone for the pair stands at 23.1905 the low from April 13. The next target on the downside for the bears is at 22.8364 the low from March 27.
On the other side, the first resistance for the pair stands at 23.7557 the daily top. A break above might drive the price to 23.9502 the 50-day moving average. In case the USDMXN pair breaks above 23.9502, then the next resistance will be met at 24.3818 the high from May 13.