USDMXN Retreat From Two Month Lows As Crude Oil Drops

USDMXN rebound today after seven consecutive days of losses as the risk-on sentiment pressured the safe-haven USD the last two weeks. The pair accelerated the correction after last week breached below the 50-day moving average. The rally in crude oil prices also helps Mexican peso as the WTI futures contract have reached $33.49 per barrel while the Brent crude oil is above $35.32.

Yesterday the Mexico Gross Domestic Product for the first quarter came in at -1.2% the fourth quarter reading was at -0.1%. The yearly reading Gross Domestic Product came in at -1.45 below the expectations of -0.4%. The Mexico Trade Balance seasonally adjusted, in USD dipped from previous $1.914B to $-4.293B in April.

From the United States, the MBA Mortgage Applications increase to 2.7% on May 22 from -2.6%. The Redbook Index came up to -1.5% on May 22 from previous -2.6%, while the yearly Redbook Index increased to -5.5% on May 22 from previous -9.5%.

Banxico last week, cut the interest rates by 50 basis points to 5.5% as was widely expected by markets.

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USDMXN Price Resistance and Support

USDMXN is 0.67% higher at 22.3368 retreating from two-month lows as the correction from historical record levels in early April stalled at 22.1281. The short term positive momentum for Mexican peso is intact, and an attempt to test the 100-day moving average can’t be ruled out. The long term outlook remains bullish for the pair as long as it holds above the 100-day moving average. 

On the upside, the first resistance for USDMXN pair stands at 22.4308 the daily top. A break above might push the price to 22.6110 the high from yesterday’s trading session. In case the USDMXN pair breaks above 22.6110, then the next resistance will be met at 23.1744 the high from May 22.     

On the flip side, the initial support for USDMXN will be met at 22,1384 today’s low. The next support area for the USDMXN pair stands at 21.6705 the 100-day moving average. The next target on the downside for the bears is at 21.3392 the low from March 16.     

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