• Mexican peso remains strong versus US dollar early in 2022.
• USD/MXN keeps testing the 20.35/40 support area.
• Recovery above 20.90 would negate the bearish bias.

The USD/MXN dropped to test the December low around slightly below 20.35 and then rebounded back above 20.40. The area around 20.35/40 is a key support that is preventing more losses for the moment.  The next level to watch comes at 20.28, a flat 2090-day simple moving average and then 20.15.

On the upside, the immediate resistance emerges at 20.60. A daily close above would expose the next one at 20.90; if broken the short-term bearish bias would be negated.

Technical indicators are slightly biased to the downside, particularly key moving averages. At the same time, USD/MXN has been falling constantly for over a month; so if it does not break firmly under 20.30 in the short term, it may have established an interim bottom.

Risk events ahead: Later on Wednesday, FOMC minutes; US jobless claims on Thursday and NFP report and Mexico CPI on Friday.

USD/MXN daily chart