• Mexican peso under pressure amid global risk aversion due to new COVID variant.
  • The retreat in USD/MXN found support above 21.65, now is approaching 22.00.

The USD/MXN is rising 1.50% on Friday, adding to weekly gains. It peaked during the Asian session at 22.15, the highest level since September 2020 and then pulled back finding support at 21.65. As of writing it is hovering around 21.90 as the market’s sell-off continues.

The concerns triggered by the new COVID-19 variant hits market sentiment. Equity markets tumbled in Europe and in the US, the Dow Jones is falling by 2.70% and the Nasdaq by 1.95%.

Emerging market currencies are falling sharply. The worst performers are the Turkish lira (USD/TRY +4.45%), the South African rand (USD/ZAR + 1.75%) and the Mexican peso.

The USD/MXN was already sharply higher for the week, not only boosted by global developments but also by domestic factors. The change in the nomination for the next head of the Bank of Mexico sent the Mexican peso lower earlier on the week.

The US dollar is up by almost 5% over the last five days versus the Mexican peso; the biggest rally since September of last year. It is about to post the highest close in more than a year. The rally could go on if market conditions remain negative.

Technical levels

This article was originally published by Fxstreet.com.Read the original article here.