USD/MXN retreats from 2-week highs and hits daily lows under 19.00

• Mexican peso recovers amid a weak US dollar and optimism about a trilateral agreement.
• USD/MXN back under 19.00 but still facing some bullish pressure.

The Mexican peso erased losses against the US dollar and recovered after hitting the lowest level in two weeks. USD/MXN peaked earlier today at 19.19 and then bounced to the downside. During the American session dropped back below 19.00 and near the end of the session was trading at daily lows at 18.95, following comments from US President Trump and Mexican President Nieto.

Trump said he’s optimistic that Canada will join the US-Mexico trade deal announced on Monday and added talks are on track for a Friday deadline. Around the same time, Peña Nieto showed optimism that a trilateral deal was achievable but warn that some steps are still needed to be renegotiated.

Earlier today, US data confirmed that the US economy grew at the fastest rate since 2014 during the second quarter (4.2% versus 4.0% expected). While in Mexico, the central bank presented the quarterly inflation report. Banxico downgraded growth forecasts for 2019 and now expects inflation to reach the 3% target later than previously expected.

USD/MXN Levels to watch

Despite falling back below 19.00, some upside pressure is still seen. A slide below 18.85 could signal a potential peak and could clear the way to more losses with a target at 18.70. On the upside, resistance levels might lie at 19.05, 19.20 (weekly high) and 19.30.