• USD/MXN holds bullish bias, approaching testing resistance zone 20.85/90.
• Risk aversion weighs on the Mexican peso and other emerging market currencies.
• Slide under 20.60 to alleviate bullish pressure.

The USD/MXN is on its way to the highest weekly close since December. After rising back above 20.70, the dollar gained momentum and currently is testing the 20.85 resistance area. A break higher, if sustained above 20.90, could lead to a test of the following strong barrier seen at 21.05.

The 100-week moving average is seen at 20.92. A close clearly above would be a positive sign for the US dollar, for a potential extension to 21.35.

The RSI and momentum in the daily chart are pointing north, still not at extreme overbought levels. No signs of a correction are seen at the moment. If the USD/MXN fails to break above 20.85/90, the Mexican peso could experience a brief rally. Only below 20.60, the pressure is expected to ease.

The outlook favors more gains in USD/MXN, particularly with a close above 20.80. The risk aversion environment with the stronger dollar, also favor the upside from a fundamental perspective.

USD/MXN daily chart