JP Morgan - "The broad-based retracement for Latam FX over the past few weeks raises the risk that a deeper corrective phase can develop. Importantly, this follows the test and hold of a number of important levels against the USD and EUR. Moreover, the deep oversold setup following the persistent weakness over the past several months suggests a consolidation phase. For the short term view, the reversals from August have retraced back to the first line of key levels presenting the first clear test and where some pause is likely due. However, the bullish risks are on the rise. One of the key highlights has been the recovery for BRL as the recent underperformance led to a test of critical levels including the 2009 high near 2.4555 for USD/BRL. The subsequent decline from the August peak has shifted the pair back to important short term support in the 2.25/26 zone. This area represents the August low and 38.2% retracement of the rally from the March low. Similarly, EUR/BRL has corrected to the key 2.99/3.00 zone which includes the July breakout area, June reaction low and 38.2% retracement from March. In turn, we are monitoring for some retracement from these levels over the short term timeframe particularly as momentum extremes seen at the August peaks have been fully unwound. In a similar manner, both USD/MXN and EUR/MXN reversed from important medium term resistance levels (18.00 for EUR/MXN and 13.46 zone for USD/MXN). Still, some pause seems due with both pairs retracing into key support levels. For USD/MXN, the 13.00/12.94 support zone will be important as it represents the late-August reaction low and 50% retracement of the rally from the July low. Similarly, EUR/MXN has declined into the 17.20/27 area. This area includes the 38.2% retracement and uptrendline from the July low and will be the first key test for the downside bias. Note that while both pairs can see some pause against these support levels, the downside risks are on the rise and corrective retracements are viewed as selling opportunities. Note that we maintain our current short position in EUR/MXN."