USD/MXN rebounds to the 24.30 area as Mexican peso weakens

• Mexican peso losses momentum amid risk aversion as Wall Street turns negative.
• USD/MXN hovering around the relevant technical area of 24.30, rebounding from uptrend line.

The USD/MXN rebounded from 23.85 and climbed to 24.39, reaching a two-day high. It then pulled back to the 24.30 area. The Mexican peso ended a two-day rally, hit by risk aversion toward emerging markets.

The Brazilian real, the Turkish lira and the Mexican peso are the worst performers on Wednesday. The slide of BRL weighs on Latin American currencies. The USD/BRL is back near 5.70 and could post a record high close.

The rally in Wall Street appears to be losing steam, removing a key factor that drove the USD/MXN pair below 24.00. Also, on Wednesday, the US dollar strengthened. The DXY is rose back above 100.00 to the highest in a week, despite the ADP employment report that showed a 20 million job loss in April. 

USD/MXN technical levels: Not yet above 24.30

The pair is hovering slightly below 24.30, a critical level in the short-term. A consolidation above the mentioned area should clear the way to more gains in line with what technical indicators suggest at the moment. The next resistance stands at 24.55/60.

On the flip side, if the pair drops under 24.00 another test of the uptrend line from the April low seems likely; currently, it stands at 23.75.