USD/MXN tumbles more than 2% from weekly highs, falls below 19.00

• Mexican peso reverses sharply from multi-month lows to 1-week highs. 
• Some optimism around NAFTA negotiations boosted the peso. 
• Latin American currencies ended higher against the US Dollar. 

The USD/MXN pair made a dramatic reversal falling more than 2% from weekly highs after the Mexican peso recovered strength and amid a slide of the US dollar against Latin American currencies. 

Late on Wednesday USD/MXN jumped to 19.37, the highest intraday level since March 15. That day failed to close above 19.30. On Thursday started to retreat and on Friday broke below 19.00. It bottomed at 18.91, the lowest in 2-weeks.  It is about to end the week hovering slightly above the 18.90 zone. 

It is the second weekly slide in a row. The sharp reversal could anticipate more slides ahead. Particularly if the pair breaks below the strong support are around 18.90. That would be seen as a signal of strength in the Mexican Peso. Below support levels might lie at 18.70 and 18.60. To the upside, the key resistance continues to be 19.30. USD/MXN traded on top but failed to post a close above that critical level and pulled back. 

NAFTA, still a key driver 

On Wednesday, the fifth round of NAFTA negotiations between the US, Canada, and Mexico started. For the first time with no officials, just technicians. Prior to the beginning, US Secretary of Commerce Ross mentioned that Mexico and Canada have more to lose at the table triggering concerns about the outcome of the talks. 

Mexican officials on Wednesday proposed to review the agreement every five years with the agreement intact while it is under revision. The proposal was seen as Mexico taking a more strategic position, not only defensive. Reuters reported that Canada is open to Mexico’s proposal.