USD/MXN: Mexican peso rally ends abruptly, worst performer of the week

• Profit taking and Presidential election polls send the Peso sharply lower. 
• USD/MXN rises almost 3% in 2 days. 

The Mexican peso ended the week as the worst performer among the most-traded currencies. It dropped sharply during the last two days and the slide still has room to go. 

The USD/MXN pair reached the lowest level since September at the beginning of the week under 18.00. The Peso failed to hold under 18.00 and weakened modestly. The currency started to decline sharply on Thursday and on Friday peaked at 18.68, the highest level since March 23. It was the biggest 2-day gain in months. 

The Peso was affected by profit-taking after rising from March to mid-April and it also turned lower following the release of new polls showing that candidate Andres Manuel Lopez Obrador’s has increased to more than 20 points ahead of the presidential elections to be held July 1. Also, a stronger US dollar pushed the pair to the upside. 

Despite the recent decline, the Peso continues to among the best performers of 2018. It rallied earlier on optimism about NAFTA and higher crude oil prices. After recent moves, the outlook clouded for the Mexican peso 

Banxico sure looking

After the sharp and quick depreciation, eyes would star turning to the Bank of Mexico. Will it implement more actions to curb Peso’s weakness? Is another rate hike possible? Much of what happens, will depend on what happens next week with USD/MXN.