USD/MXN remains under 18.70, near 15-month lows

• Mexican peso holds firms against the US dollar. 
• USD/MXN marginally higher after having the lowest close since August. 

The USD/MXN bottomed on Monday at 18.64, the lowest intraday level since September 2018 and then it bounced to the upside. Near the end of the session, it trades at 18.66, modestly higher for the day. 

Price action remained limited in USD/MXN, as well as in major forex pairs amid low volume. The greenback posted mixed results.  

“Markets were generally steady as investors awaited key economic events this week while the US markets remained closed for Martin Luther King Day. In addition, the first central bank meetings of the year will be taking place in the Eurozone, and Japan and Canada are to issue monetary policies updates, although no significant changes are expected to be made. Moreover, the Davos World Economic Forum will start tomorrow, where the US President Donald Trump will discuss trade disputes with the European Commission President. Finally, President Donald Trump’s impeachment trial will also officially start tomorrow, Tuesday”, explained BBVA analysts. 

In Mexico, on Thursday half-month inflation data is due and on Friday, the Economic Activity Index for November. 

Technical outlook 

Despite rising on Monday, the trend in USD/MXN still points clearly to the downside. At the moment, the 18.65 area is offering support. Below that level at 18.60, another strong support emerges. A break lower could clear the way for a slide to 18.40. 

On the upside, the immediate resistance in USD/MXN is now seen at 18.75 followed by 18.85 (20-day moving average). If the US Dollar recovers above 18.90 it would alleviate the bearish pressure, favoring some consolidation.