• US dollar jumps and then makes a full pullback.
• Mexican peso gains on risk appetite, on Thursday Banxico’s decision.
• USD/MXN upside capped by 20.45, testing the 20-day SMA.

The USD/MXN made a run to 20.46 after the release of US inflation data, reaching the highest level in a week. Then, amid a general reversal of the US dollar pulled back all the way down back and printed a fresh daily low at 20.21, slightly above the 20-day Simple Moving Average (SMA).

The 20-SMA at 20.20 is the immediate support level and a break lower should clear the way for a test of an uptrend line at 20.08. Below the line there is not much support until the May low at 19.99, also a horizontal critical area.

The daily RSI and the Momentum turned south, suggesting some strength ahead for the Mexican peso that would be confirmed with a daily close under 20.20.

If USD/MXN remains above 20.25, a new test of 20.45 would remain on the table. The area around 20.45 also contains the 200-day SMA. A consolidation above should clear the way for more gains above the 20.50 horizontal resistance. The next significant barrier is seen at 20.70.

USD/MXN daily chart