USD/MXN drops back to 19.00 as recovery fades

• Mexican peso retreats marginally against US dollar from 2-month highs. 
• USD/MXN remains near 19.00, down 8% from December peak. 

The USD/MXN pair bottomed today at 18.95, the lowest level since mid-October and then rebounded. The pair peaked at 19.08 and pulled back to 19.00, where it is trading near the end of the session. 

The move to the upside took place amid a stronger US Dollar on the back of some risk aversion and some potential profit taking. 

The short-lived recovery signals that the bearish trends remain strong and in place. So far, the area around 19.00 appears to limit the slide but no signs of a correction are seen. 

The USD/MXN is about to post a modestly daily gain and continues to be unable to move away from 12-week lows. The Mexican peso remains strong and among the top performers since the beginning of the year supported by the positive reception of the budget and the negotiations with bondholders of the new airport. 

The gasoline supply crisis in Mexico is having so far no impact neither on economic expectations, nor to Mexican assets. 

Levels to watch 

The area around 19.00 continues to be a strong support. A consolidation below would open the doors for an extension of the decline, likely to test 18.85. The next support comes at 18.70. To the upside, resistance levels lie at 19.15/20 followed by 19.30 and the strong 19.50 zone.