The Mexican Peso falls to five-week lows against the Dollar as the chances of a Fed rate cut in March diminish

• The Mexican Peso depreciates for the second consecutive day due to the strength of the Dollar in the foreign exchange market.
• USD/MXN has risen to 17.38, its highest level since December 14.
• US retail sales and industrial production data grew more than expected in December.

The price of the Mexican Peso is devaluing against the US Dollar for the second consecutive day. USD/MXN opened on Wednesday around 17.20 and has been advancing steadily to reach new one-month highs at 17.38 at the Wall Street open.

The dollar continues to be favored by risk aversion and the decreasing chances of a rate cut in March

He Dollar Index (DXY) advances for the third consecutive day, strengthening in a context of risk aversion due to the extension of the conflict in the Middle East and market bets on a delay in rate cuts by the United States Federal Reserve. The FedWatch tool now lowers the probability of a first rate cut in March to 55.7%when yesterday Tuesday it was 70.9%.

The Dollar has risen in the last few hours to 103.67, its highest value since December 13. At the time of writing, the greenback is trading above 103.58, gaining 0.24% on the day.

The United States today published its retail sales and industrial production data for December, improving expectations. The retail sales grew 0.6% monthlyabove the previous 0.3% and the estimated 0.4%, while the industrial production increased by 0.1% compared to the previous and expected 0%. Capacity utilization remained at 78.6% in December, slightly below the expected 78.8%.

USD/MXN Price Levels

The price of the Dollar against the Mexican Peso is now at 17.32, gaining 0.65% daily. With today's rise, the USD/MXN has surpassed two key resistances, 17.10 (January 3 high) and 17.30 (December 18 ceiling). The first major barrier now appears at the monthly high recorded on December 5 at 17.56. Higher up, the rise may extend towards the psychological zone of 18.00.

If it turns downwards, initial support awaits in the region of 17.00, which has acted as a hinge on the rise and fall in recent months. Below, the pair could fall towards 16.78, the low of the last four and a half months registered on January 8.