USDMXN: Mexican Peso is The Strongest Currency In The World Against USD gaining 11% the last 3-Weeks

USDMXN slumps to the lowest level since March 16 as it trades lower for 15 days out of the last 16 trading sessions. Investors dump greenback across the board amid the unrest in many cities in the United States after the death of George Floyd. Mexican peso supported by the liquidity provided by central banks and optimism on reopening of the economy.

That story makes Mexican peso attractive as it provides high real and nominal rates. Mexican peso one-month bills offer a yield of up to 5.4%. Banxico, cut the interest rates by 50 basis points to 5.5% as was widely expected by markets, but the spread is still attractive than other major economies.

NAFTA group currencies gain momentum against the greenback as the escalation in US-China trade relations boost hopes that will benefit Mexican peso on tighter trade relationship with the USA. The strong rebound in crude oil prices also helps the Mexican peso.

On the economic data today, the United States Redbook Index rose -1.4% in May from previous -1.5%, the yearly reading came down to -7.2% on May 29 from previous -5.5%. Also, earlier today reported that the U.S. ISM-NY Business Conditions Index recovered to 19.5 in May from 4.3 in April.

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USDMXN Price Analysis

USDMXN is 1.58% lower at 21.6875 making 12-week lows and as of writing it is trading below the 100-day SMA which if breached convincingly might attract more sellers to join the action. The technical outlook is neutral now for the pair after the recent correction while if today settles below the 100-day moving average would open the way for lower levels. The long term outlook remains bullish for the pair as long as it holds above the 100-day moving average. 

On the downside, the first support for USDMXN will be met at 21,5685 today’s low. The next support area for the USDMXN pair stands at 21.3392 the low from March 16. The next target on the downside for the shorts is at 20.5603 the 200-day moving average.

On the other hand, the first resistance for the pair stands at 22.1141 the daily high. A break above might push the price to 22.4017 the high from May 28 trading session. In case the USDMXN pair breaks above 22.4017, then the next resistance will be met at 23.1744 the top from May 22.  

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