USD/MXN drops below 17.80 to the lowest since May 2016

The Mexican peso is rising against the US dollar for the fifth day in a row and reached the highest level in more than a year. Today the greenback is falling considerably against emerging market currencies. 

USD/MXN broke below the 17.80 support area and bottomed at 17.72, the lowest since May 2016. The pair remains below 17.80, pointing to more losses. 

A 20% slide 

Back in January, the US dollar climbed to record highs at 22.00. Since then it lost almost 20%. Rate hikes from Banxico and the improvement in the relationship between the Trump administration and Mexico, were the main drivers of the recovery during the first half of the year. 

Last week, USD/MXN was moving to the upside, attempting to recover lost ground. After finding resistance at the 18.40 barrier, turned to the downside. A weak US dollar pushed the pair further down. 

If the decline continues, medium-term support levels might be located at 17.60, 17.45 and 17.00/05 (2016 lows). To the upside, the 17.80 area is now the immediate resistance, followed by 18.00 and 18.40 (Jul high).