USD/MXN trades below 17.50 for the first time in 14 months

The Mexican peso is rising against the US dollar on Tuesday, resuming the upside after a consolidation day on Monday. It reached a fresh 14-month high as it continues to rally. 

Between a weak USD and NAFTA

Since January the USD/MXN has been falling constantly. The downside gained momentum last week and today is falling for the seventh time out of the last eight trading days. 

The pair remains week on the back of a decline of the greenback across the board, with the US dollar index at the lowest since September, affected by the latest US economic data and, more recently by the failure of the Trump administration to repeal Obamacare. 

The Mexican peso gained momentum after Trump’s administration released its plan for renegotiating the North American Free Trade Agreement (NAFTA). Some economists noted no major changes. They highlighted US intention to reduced the trade deficit with Mexico and Canada. Markets appear to be discounting that a new agreement is likely. 

USD/MXN at 17.50 

The pair currently is trading at 17.50, 2.40% below where it was a week ago. Today it bottomed at 17.47, the lowest since May 3, 2016. 

From a technical perspective, the area around 17.45/50 could be considered as a relevant support level. A consolidation below would clear the way for an extension of the slide. On the upside, any recovery of the US dollar at this point would likely be seen as a correction. Resistance levels might lie at 17.80 (June lows), 17.89 (20-day moving average) and 18.30/35 (May lows).