USD/MXN spikes to 19.60 and retreats

• Mexican peso falls modestly versus US dollar on Wednesday after rallying on Fed’s emergency cut. 
• USD/MXN finds support again at 19.20 and rebounds sharply to 19.60.  

The USD/MXN pair is rising modestly on Wednesday after turning positive during the American session. The pair dropped to as low as 19.18 and then rebounded considerably, hitting at 19.62 a two day high. 

As of writing it trades at 19.51, up near ten cents for the day, at the same level it had minutes before the interest rate cut from the Federal Reserve. The decision from the Fed leaves the door wide open for another cut at Banxico. Now analysts consider the Bank of Mexico could be more aggressive at its March meeting. 

The US dollar is posting mix results and so are emerging market currencies. Overall, global financial markets are having a relatively quiet session compared to recent moves. 

Technical outlook 

From a technical perspective, USD/MXN is trading sideways in the very short-term, consolidating in a wide range that reflects the recent spike in market volatility. The upper limit of is seen around 19.55 and the lower bound at 19.20. If the Mexican peso manages to break and hold under 19.20, it would likely drop further to test 19.00. On the upside, a significant close above 19.55 would target 19.70; that protects the YTD high reached last week at 19.89 (also a long-term downtrend line).