USD/MXN rebounds after hitting a six-week low, from a key dynamic support

• Mexican peso extends rally versus US dollar, reaches critical levels. 
• Improvement in market sentiment helps Latin American currencies. 

The USD/MXN pair dropped earlier today to 19.03, the lowest intraday level since October 28. Later, it rebounded trimming losses and as of writing, it trades at 19.09, modestly lower for the day. 

The rally in Wall Street amid trade headlines boosted the demand for riskier assets, benefiting the Mexican peso and other Latin American currencies. During the second half of the American session, the greenback recovered some lost ground. 

Rumors and speculations around a deal between the US and China are driving markets. Ahead of the Asian session, more headlines seem likely, particularly as we get closer to Sunday, when new tariffs to Chinese goods kick in. Also, the results of the general election in the United Kingdom could have an impact on market sentiment. 

Testing dynamic long term support 

The USD/MXN pair hit today the area where a long-term uptrend line from 2017 stands. In the first attempt, the Mexican peso failed to break it and pulled back. 

A weekly close below 19.00 would confirm the breakout, leaving the pair vulnerable to a test of the 2019 lows around 18.75. If USD/MXN holds above and offers a recovery surpassing the 20-week moving average at 19.35, the greenback would seem ready for a stronger rebound.