USD/MXN tumbles toward 22.00 as Wall Street erases all losses

• Mexican peso gains momentum as US stocks turn positive.
• US dollar accelerates slide as Federal Reserve starts buying a broad and diversified portfolio of corporate bonds.

The USD/MXN peaked earlier on Monday at 22.75 and then it pulled back modestly. During the American session, it started to correct lower and over the last hours it accelerated to the downside amid a decline of the US dollar across the board. As of writing, the pair trades at 22.10, below Friday’s lows.

The move lower took place as equity prices in Wall Street spiked to fresh highs following the announcement of the Federal Reserve that will start buying a more diversified portfolio.

The report boosted market sentiment and weakened the greenback versus majors and also against emerging market currencies. Gold and crude oil prices reached fresh session highs.

Levels to watch

On the downside, the next support level in USD/MXN is seen at 22.00/21.95. A break lower would clear the way for a test of 21.70 that protects the support band at 21.45/50 (June low).

A recovery back above 22.45 would strengthen the US dollar. The next resistance stands at 22.70 followed by last week high at 22.95.