- The USD/MXN falls 0.54% today, operating at the time of writing at 19.99.
- The dollar index (DXY) loses 0.62% daily, reaching minimum of April 14 at 99.35.
- The United States retail sales increase 1.4% in March, exceeding market expectations.
- The attention of investors will be to the speech of the president of the Federal Reserve, Jerome Powell.
The USD/MXN marked a daily maximum in 20.13, attracting aggressive vendors that brought parity to a minimum of the day in 19.97. At the time of writing, the USD/MXN operates over 19.99, losing 0.54% in the day.
The dollar loses traction against Mexican peso after mixed economic data
Based on information provided by the United States Census Office, retail sales presented an increase of 1.4% in March, improving growth estimates of 1.3% and 0.2% observed in February.
In contrast, the US industrial production registered a decrease of 0.3% in the same period, worsening the estimated decrease of 0.2% and the increase of 0.8% recorded the previous month.
After this news, the dollar index takes up the bearish perspective, falling 0.64% daily, reaching minimum of April 14 in 99.35.
In this scenario, the Mexican peso gains ground against the US dollar, although it remains within the operational range of the previous session, while the USD/MXN falls 0.54% on Wednesday, quoting when writing about 19.99.
The look of the operators will focus on the speech of Jerome Powell, president of the Federal Reserve. The consensus expects to provide clarity on the rhythm of type cuts taking into account the tariff uncertainty caused by the commercial rhetoric of Donald Trump.
USD/MXN Price levels
The USD/MXN established a short -term resistance given by the maximum of April 14 in 20.33. The next key resistance is found in 21.08, maximum of April 9. Down, the important support is in 19.84, pivot point of March 14.
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
