USDMXN trades higher today as USD gains momentum across the board and especially against the emerging markets currency. USD supported by its status as a safe-haven asset as the global reserve currency amid the coronavirus outbreak.
Weak economic data from the USA continues, but investors seem to ignore the economic data from the USA. Today it was the ADP report that showed that Employment Change came in at -20.2 million, below the expectations of -21 million in April. Fed’s Bullard warned that the April jobs report would be one of the worst on history.
The central bank of Mexico surprised markets with a 50 bps rate cut two weeks ago that brought the target rate at 6% in an attempt to boost the economy and increase exports as the coronavirus outbreak heavily hit Mexican economy. That was the third interest rate cut in the last three months for a total of 125 bps cuts.
USDMXN is 1.13% higher at 24.2726 as the pair formed a strong base to the upward trend line that started since March 18. The technical picture is bullish for USDMXN, and the pullbacks look like a buying opportunity.
On the upside, the initial resistance stands at 24.3489 the daily high. A break above might drive the pair to 24.9034 the high from May 4. In case the USDMXN pair breaks above 24.9034, then the next resistance will be met at 25.2859 the high from April 24.
On the flip side, the initial support for USDMXN will be met at 23,8723 today’s low. The next support zone for the pair stands at 23.6676 the low from April 30. More bids might emerge at 23.1798 the 50-day moving average.