The Dollar falls to the lowest of the day against the Mexican Peso awaiting the Fed's comments

• USD/MXN falls to daily lows of 16.89.
• The Dollar loses momentum due to the good opening of the indices on Wall Street.
• The focus of the week will be on inflation in Mexico and Banxico's interest rate decision.

The USD/MXN opened the week around 16.99, but little by little it has been giving ground, falling in the early hours of the American session to a daily low of 16.89.

The Dollar weakens against the Peso due to the differences in expectations about interest rates between the Fed and Banxico

The market has changed its feelings regarding the Fed's stance on interest rates. If after the Federal Reserve's announcement last Wednesday it was assumed that at least until September there would not be a first rate cut, the weak data on Non-Farm Payrolls and the US ISM Services PMI on Friday They turned this feeling around.

The Dollar Index started the day around 105.20 points, but has deflated to a low of 104.86, and now remains below 105.00.

The CME Group's FedWatch tool rules out the options of a first cut at the Fed meeting on June 12, as it places the probability of rates remaining at the current 5.5% at 91.5%. For July, the options of remaining unchanged are at 66.9%, while for September they drop to 33.4%.

USD/MXN traders will be paying attention today to the speeches of Fed members Thomas Barkin and John C. Williams, as their words could change the market mood.

Mexico data in the spotlight

Mexico will reveal several key data for its currency this week. Tomorrow, Tuesday, the focus will be on consumer confidence for April, but on Thursday all eyes will be on April inflation data, expecting an increase to 4.63% annually from 4.42% in March. A few hours later, the Central Bank of Mexico (Banxico) will announce its decision on interest rates. The entity is expected to maintain rates unchanged at 11%, as its governor, Victoria Rodríguez Ceja, has been anticipating for weeks.

USD/MXN Price Levels

The pair is clearly leaning lower on very short-term charts. With USD/MXN trading at the time of writing above 16.90, losing 0.40% on the day, immediate support is at the daily low 16.89, followed by 16.82, last week's low recorded on May 3. A break below this level could trigger a further decline towards the 16.50/16.55 area first and 16.26 later (2024 low reached on April 9).

To the upside, it is necessary to firmly break the psychological zone of 17.00 so that the USD/MXN can advance to around 17.25, where the highs of the previous week are.

USD/MXN 15-minute chart