USD/MXN jumps to three weeks highs above 19.90 on risk aversion

• US dollar rises across the board on risk aversion.
• US yields rise sharply after inflation data.
• USD/MXN heads for biggest weekly gains since March.

The USD/MXN is having the best day in weeks boosted by a rally of the US dollar across the board. The pair jumped from under 19.70 to 19.96, hitting the highest level since May 19.

Following US inflation data, Wall Street resumed the decline and US bond yields rose further. The Consumer Confidence report from the University of Michigan contributed to risk aversion. The Dow Jones is falling by more than 2% and the Nasdaq tumbles 3.40%.

Bullish outlook

The USD/MXN rose back above the 20-day Simple Moving Average. The daily chart shows bullish signs with the RSI moving north, far from overbought levels, and the Momentum above the 100 level.

If the pair holds above the 19.90 resistance area, a test of the 20.00 area seems likely. The bullish tone will remain in place while above 19.70. Under the mentioned level, the Mexican peso will recover strength, exposing the 19.50 area.

Technical levels