- The USD/MXN shoots at a maximum of nine weeks at 21.08.
- The US dollar falls against much of the assets after the announcement of additional tariffs of 84% from China to the US, but is promoted against the Mexican peso.
- The general inflation of Mexico rises to 3.8% annual in March, while the underlying CPC is moderated to 3.64%.
The USD/MXN has starred in a strong rise in the last hours, rising to a maximum of two months at 21.08 after opening the day testing a daily minimum of 20.75. At the time of writing, the dollar is quoted in front of the Mexican peso over 20.91, winning 0.33% in the day.
The US dollar falls strongly after the rise of China’s tariffs to the US, but manages to be imposed on the Mexican peso
The US dollar index (DXY) has sunk at 101.84, a new minimum of three days, after China responded to the US imposing tariffs of 84% on its imports. This measure has been taken after US President Donald Trump decided yesterday to raise rates on Chinese products to 104%.
The European Union also has just approved 25% tariffs at 1,600 American products. The rates will be applied in different phases, starting on April 15, although it will not be until May 16 when most of them are activated.
The intensification of the tariff war is causing large oscillations in the market, while experts fear a global recession and an increase in inflation.
Later in the day, the focus will be in the minutes of the Fed, which will offer clues about the perspectives of cuts in the midst of tariff uncertainty. Tomorrow Thursday, the United States will publish the IPC of March, waiting for an annual 2.6% moderation compared to the previous 2.8%. Underlying inflation could be reduced to 3% from 3.1% in February.
The general inflation of Mexico rises in March, the underlying IPC Baja
The consumer price index (CPI) of Mexico has risen to 3.8% in the annual March reading from 3.77% in February. This is the highest inflation level in the last three months. The data is in line with market expectations.
The annual indicator excluding food and energy has softened 3.64% from the previous 3.65%.
The focus now passes to Banxico minutes that will be published tomorrow Thursday at 15.00 GMT.
USD/MXN Price levels
The relative force index (RSI) of 14 is well above 50, showing more space to continue rising in long -term graphics, but pointing to a possible correction in smaller periods of time.
In case of continuing upwards, the first important resistance is at a maximum of 2025 reached on February 3 at 21.29. Above, the objective is on the roof of March 2022 in 21.46, and above the highest level of 2021 in 22.15.
Down, the mobile socks of 100 periods in time and day graph, in 20.51 and 20.37, respectively, will act as a containment zone. Below awaits the psychological zone of 20.00.
Mexican weight FAQS
The Mexican weight (MXN) is the most commercialized currency among its Latin American peers. Its value is widely determined by the performance of the Mexican economy, the country’s central bank policy, the amount of foreign investment in the country and even remittance levels sent by Mexicans living abroad, particularly in the United States. Geopolitical trends can also affect MXN: for example, the Nearshoring process (or the decision of some companies to relocate the manufacturing capacity and supply chains closer to their countries of origin) is also considered a catalyst for the Mexican currency, since the country is considered a key manufacturing center in the American continent. Another catalyst for MXN is oil prices, since Mexico is a key exporter of the raw material.
The main objective of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in or close to its 3%target, the midpoint of a tolerance band between 2%and 4%). To do this, the bank establishes an adequate level of interest rates. When inflation is too high, Banxico will try to control it by raising interest rates, which makes the indebtedness of homes and companies more cooling, thus cooling the demand and the economy in general. The highest interest rates are generally positive for Mexican weight (MXN), since they lead to higher yields, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the MXN.
The publication of macroeconomic data is key to evaluating the state of the economy and can have an impact on the valuation of the Mexican weight (MXN). A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only attracts more foreign investment, but it can encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this fortress is accompanied by high inflation. However, if the economic data is weak, the MXN is likely to depreciate.
As an emerging market currency, the Mexican weight (MXN) tends to rise for periods of risk, or when investors perceive that the general market risks are low and, therefore, are eager to participate in investments that carry a higher risk. On the contrary, the MXN tends to weaken at times of market turbulence or economic uncertainty, since investors tend to sell higher risk assets and flee to the most stable safe shelters.
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.
