USD/MXN rises to 1-week highs

The Mexican peso is falling for the third day in a row against the US dollar. The decline has been modest so far. The USD/MXN pair is trading slightly above 20.70, at the strongest level in a week. 

Despite gaining ground for the third day, the pair still remains below 21.00. Today it tested the 20.75 key short-term resistance and pulled. A break followed by a consolidation on top could open the doors to further gains, exposing 21.00; above here, attention would turn to 21.38, the all-time high it reached back on November 11. 

If it remains under 20.70/75, the peso could gain moment favoring a retreat in the USD/MXN. The short-term support to watch is the 20.10/15 area, that is where last week lows area located. 

Waiting for Banxico and the Fed

The US dollar rallied in the market yesterday but only posted marginal gains against the Peso that showed some resilience. Market participants expect a rate hike from the Federal Reserve on December 15. The day after, the Bank of Mexico will have its monetary policy meeting. If the Fed raises and the USD/MXN pair continues to climb, the Mexican central bank could also raise rates.