USDMXN pares strong gains after the US weekly jobless claims jumped to 6.6 million, well above the expectations of 3.1 million. The total jobless claims the last two weeks has topped 10 million, a historic high. Continuing Jobless Claims registered in at 3.029 million below the forecasts of 4.882 million on March 20.
The pair returned to unchanged level after the news, but as of writing USD is back on a positive foot.
Coronavirus outbreak and the sharp drop in crude oil prices pressured the Mexican peso and sent it to record lows against the US Dollar on March 23. Meanwhile, S&P downgraded Mexican sovereign rating to BBB from BBB+, as the socio-economic implications (a hike of the unemployment rate) might lead to sharper-than-expected recession. If that is the case, we might see further Mexican Peso weakness. The US economy will also slow down, thus impacting directly Mexican economic situation and also contributing to MXN weakening at least until the third half of 2020.
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USDMXN is 0.45% higher at 24.3485 as positive momentum accelerates. The technical outlook for USDMXN is clearly bullish for the pair and the pullbacks should considered as a buying opportunity.
On the upside, immediate resistance will be met at 24.4131 the daily high. Next resistance stands at 24.6377 the high from yesterday’s session. A credible move above might open the way for a move to 24.8989 the high from March 25.
On the other hand, the initial support for the USDMXN pair will be met at 23,9172 today’s low. The next support for the pair stands at 23.6236 yesterday’s lows, which guards the recent lows at 22.9399.