• Mexican peso among top performers of the week. 
• USD/MXN head for lowest weekly close since July 2018. 

The USD/MXN finally broke below the 18.74 level and it bottomed at 18.68, the new 15-month low. Near the end of the week, it is trading at 18.69, holding a strong bearish tone, in line with the dominant trend. 

The Mexican peso is posting modest gains on Friday but enough to become one of the best emerging market currencies of the week. The improvement in risk sentiment and technical factors favoured MXN. 

“Equity markets slightly extended the increases across the board during the week, underpinned by the final agreement on the U.S.-China phase one agreement, the improvement in the U.S. activity data (retail sales and regional PMI) and mixed company earnings. However, European indices were initial laggards, dragged by auto stocks and banking sectors, but hit new record highs on Friday after reassuring Chinese GDP data. Equity volatility remained well contained, underscoring the risk-on mood across markets”, explained BBVA analysts. Also the political situation in Latin American remains calm helping its currencies and the MXN. 

USD/MXN: More losses ahead? 

The daily and the weekly chart point to further losses if it remains at current levels. The USD/MXN broke today to the downside after moving in a range for days. The bearish trend is firm, following the breakout of a long-term uptrend line weeks ago. 

On the downside, the next support is seen at 18.60/65 and below the 18.40 area that should limit the downside, favoring a rebound. If the greenback recovers, it needs to climb back above 18.85 in order to alleviate the pressure.