The Mexican Peso (MXN) is on the rise, gaining ground against major currencies as market fears of a US recession ease, sparking a three-day rally. This uptrend is supported by a return of risk appetite in the market, with Asian markets following Wall Street’s positive rebound last Friday.
Currently, one US Dollar (USD) buys 18.81 Mexican Pesos, EUR/MXN trades at 20.54, and GBP/MXN at 24.00.
Key Insights into the Mexican Peso’s Recovery
The recent market turmoil, driven by recession fears in the US, led to a surge in demand for the Mexican Peso as investors sought higher returns in a risk-on environment. The recent rate cut by the Bank of Mexico, contrary to expectations, further boosted the Peso’s attractiveness.
However, analysts caution that the Peso’s rally may be short-lived as carry-trade flows diminish, impacting its value. Despite this, the currency is deemed to be nearing its fair value, according to experts.
Technical Analysis and Outlook for USD/MXN
From a technical standpoint, the USD/MXN pair is currently correcting within an upward channel, suggesting a temporary pullback in the midst of a broader uptrend. A break below key support levels could signal further downside potential.
USD/MXN 4-hour Chart
Overall, the Mexican Peso’s recent performance reflects a combination of market sentiment, economic indicators, and technical factors, highlighting the currency’s resilience amid global uncertainties.