• The Mexican peso holds steady versus the US dollar despite volatility.
• USD/MXN with a bearish bias, still holding above 20.852.

The USD/MXN holds a negative bias in the short-term but it needs to break the key short-term support at 20.85. A daily close below should open the doors to more losses, targeting 20.70 initially. An extension below could target the 20.50 zone.

So far, the Mexican peso has been unable to break firmly 20.85. It bottomed on Tuesday at 20.82, the lowest level since March 4 but quickly bounced to the upside amid a deterioration in market sentiment.

The first resistance is seen at 20.90, a downtrend line. Above, a test of 21.00 is expected. A break and a consolidation above 21.05 would add support to the dollar for an extension. The next strong barrier that should limit the upside is 21.30.

The main trend remains bullish but a daily close below 20.65 should turn the bias to neutral. Ahead of the FOMC meeting, with the war in Ukraine and global uncertainty, volatility is set to remain elevated.

USD/MXN daily chart