USD/MXN: Mexican peso consolidates recovery after US Presidential debate

The Mexican peso printed fresh highs against the US dollar during Tuesday’s American session and in the currency market is having the best day in months. The peso surged after the first US Presidential debate that according to most observers was won by Hillary Clinton.

Correction; double top?

USD/MXN  reached all-time highs yesterday near 19.92 and recently it printed a 1-week low at 19.42. It was trading at 19.46, down 2.12% for the day so far.

Today’s decline is an important correction and a consolidation around current levels could set a double top pattern. The pair last week tested the 19.90 area and then pulled back to 19.50 from where it climbed back toward 19.90, but again suffered a rejection. The double top pattern with a support at 19.50, has a bearish target around 19.10.

A volatile week expected

Taking into account that on Thursday the central bank of Mexico (Banxico) will announce its decision on monetary policy, volatility in the Mexican peso is likely to remain high.

Before the recent USD/MXN rally (from 18.20 to 19.90) most analysts expected no change in rates, but last week, as the pair approached 20.00, the odds of a rate hike soared. The meeting will take place on Thursday. Traders would pay attention to the decision and also to the statement that could include measures to curb the decline of the peso.