USD/MXN drops further near 20.70, fresh monthly low

• USD/MXN keeps falling even as Wall Street extends slide.
• Mexican peso among top weekly performers.
• Banxico surprises with an interest rate hike of 50bps.

The USD/MXN is falling for the third day in a row and not even risk aversion is avoiding the Mexican peso to add to weekly gains. The cross trades at 20.71, the lowest level in a month.

The Mexican peso is among the top performers of the week. It was already strong and Banxico’s decision on Thursday to raise the key interest rate by 50 bps, above the 25 bp increase of market consensus, boosted MXN even further.

Also, technical factors contribute to the decline. USD/MXN broke the strong support area around 20.90 and now it looks poised to test the 20.65 area. Below the next support might be seen at 20.45/50 followed by a key long-term trendline around 20.15.

On Friday, the Dow Jones is falling 1.65% and the Nasdaq 1%. The slide in equity prices, neither the Turkish lira crisis, is affecting so far the Mexican peso that together with the South African rand are the biggest gainers.

USD/MXN weekly chart