USD/MXN hits fresh eight-week highs above 19.50 and eyes 20.00

• Mexican peso suffers most significant daily loss against the US Dollar since May 31. 
• USD/MXN consolidates above 19.50 heads for next resistance area seen at 19.80. 

The USD/MXN is up almost 2% on Monday amid a rally of the US Dollar against emerging market currencies. According to Reuters, they are having the biggest daily decline in over three years on Monday, measured by the MSCI's index.

All because of US-China

The key driver of the rally in USD/MXN is the escalation in trade tensions between the US and China that triggered concerns across global financial markets, hitting high yielding assets. 

The Dollar in Mexico was rising by almost 2%. Despite the strong move, no signals of stabilization were seen yet as equity prices in Wall Street continued to decline. Near the end of the session, the DOW JONES was losing 900 points or 3.30% while Treasuries kept rising. The 10-year yield was at 1.72%, the lowest since 2016. 

Levels to watch 

The USD/MXN broke above 19.50 and recently climbed to 19.67, the highest level since May 31. Back then, rose to those levels after US President Trump announced tariffs to Mexican imports. After US and Mexico reach a deal, USD/MNX dropped back to the 18.90/19.30 range that kept price action limited for weeks until today. 

To the upside, the next key level is seen at 19.80; a consolidation on top would clear the way for a test of 20.00. On the flip side, a retreat below 19.45 would alleviate the bullish pressure.