USD/MXN fails to hold above 19.20, remains sideways

• Mexican peso erases losses versus the greenback on the back of risk appetite. 
• Banxico cuts growth forecast for 2019 and 2020. 

The USD/MXN peaked during the US session at 19.26, the highest level since Friday but failed to hold on top of 19.20 and pulled back. The greenback continues to be unable to sustain above the mentioned level showing lack of strength for moving further to the upside. 

The Mexican peso recovered strength on the back of risk appetite. USD/MXN moved to the downside as equity prices in Wall Street trimmed losses. The correlation with the equity market was higher than the one with crude oil prices on Wednesday.

The Mexican peso remains steady following the Quarterly Inflation Report from the Bank of Mexico. The Board was offering a press conference explaining its decision and their outlook. Banxico cut growth forecasts for 2019 to 1.1% - 2.1% from 1.7% - 2.7% and they see growth risks tilted to the downside. They also lowered 2020 growth projections to 1.7% - 2.7% from 2% - 3%. 

USD/MXN Levels to watch 

To the upside, the immediate resistance continues to be the 19.20 area and above the key level is 19.30: a close on top would point to an extension of the move toward February highs at 19.45. The very short-term bias points to the upside, but a break under 19.15 would invalidate the bias. The immediate support is 19.10 and a slide below will likely lead to a test of 19.00, the last barrier before the January low at 18.85.