USD/MXN retreats back to consolidation range as Mexican peso strengthens

• Mexican peso hit lowest since Thursday amid emerging market jitters and then recovers on crude oil rally.
• USD/MXN remains in a consolidation range, after finding resistance below the key 19.40 area. 

The USD/MXN pair rose earlier today but erased all gains and dropped back to the previous trading range. The short-term trend remains sideways with the pair firm above 19.00. 

Earlier today, USD/MXN climbed to 19.36, the highest levels since last Thursday. It rose boosted by emerging market concerns. The Brazilian real was losing today 2% against the US dollar amid political concerns. Near 19.40 the pair turned to the downside and dropped quickly to 19.20 approaching daily lows. The move lower took place amid a rally in crude oil prices. The WTI barrel was up 2.75% boosted by the Hurricane Florence, which is moving towards the Gulf Coast and also by US sanctions to Iran. 

With the retreat, USD/MXN continues to trade in a consolidation range under 19.40 and above 19.15, far from last week intraday high at 19.67. It reached that level amid a sell-off in EM currencies. Despite the turmoil around EM, the Mexican peso continues to be among the top performers so far during 2018 as investors see its economy as less vulnerable and amid a positive presidential transition. 

Technical levels 

To the upside, the immediate resistance could be seen at 19.35/40, a consolidation on top could clear the way for a test of the next barrier seen at 19.65/70. On the flip side, support levels might lie at 19.15 (weekly low) and 19.05. As long as USD/MXN remains on top of 18.80/85 the outlook will continue to be biased to the upside.