USD/MXN soars to one-month highs, gains 2% in 24 hours

• Mexican peso extends slide versus US Dollar, technical outlook worsens. 
• Banxico meeting on Thursday, will the 2% rally in USD/MXN impact on the decision/statement? 

The USD/MXN broke a key resistance level and jumped to the highest level in more than a month above 19.50, on another bad day for Latin American currencies and ahead of the Banxico meeting. 

Central bank meeting tomorrow 

The pair rose over 2% during the last two days. The move higher took place in a difficult time for those who want the Bank of Mexico to cut rates more aggressively. Tomorrow at the Board meeting, Banxico is expected to cut rates by 25bps. Two out of the five members voted for a 50bps rate cut at the last meeting. 

With the CPI on target, the latest cuts from the Fed and the Mexican economy showing practically no growth, many economist want an accelerating in the easing cycle. The decline of the Mexican peso does not contribute to those expectations. Sharp moves in the exchange rate put the central bank on the defensive. 

MXN joins the downside 

Latin American currencies remain under pressure on the back of turmoils and economic and political uncertainty in the region. So far, the Mexican peso was holding relatively steady until yesterday when it lost key technical levels. 

The USD/MXN rose above the upper limit of a consolidation range at 19.30 and today it broke a downtrend from August highs. It hit 19.52, the highest level in a month and the pulled back. As of writing trades at 19.46. 

The area 19.45/50 area is a strong resistance and a break higher would target 19.60. On the downside, 19.25/30 is likely to become the key short-term support.