- USD/MXN has fallen at the European open to three-week lows at 17.00.
- The price of the dollar falls due to the weakening of US bond yields.
- Mexican consumer confidence improves in January, focus on Banxico.
The USD/MXN retested the three-week low reached yesterday in the psychological zone of 17.00 this Wednesday. After the opening of Wall Street, the pair is trading in a narrow range around 17.00/17.05.
The price of the Dollar declines along with US bond yields.
The Dollar Index (DXY) extends the decline recorded at the end of Tuesday, falling today to a three-day low of 103.94. The decline has been caused by the increase in risk appetite in the markets and the decline in US Treasury bond yields. The 10-year bond has fallen to 4.06% from 4.17% reached yesterday, while the 2-year bond has fallen to 4.37% from 4.47%.
The decline in the dollar remains limited by expectations of a delay in interest rate cuts by the Fed. CME's FedWatch tool places the options for a downgrade in March at 23.5%rising from 19.5% yesterday, while cuts the probabilities of a first drop in May to 53.8% from the previous 56.6%. New clues on the path of interest rates are expected today, as speeches are scheduled from several FOMC members, including Thomas Barking, Michelle Bowman and Adriana Kugler. Previously, the president of the Minneapolis Federal Reserve, Neel Kashkarihas stated on CNBC that “At the moment, two or three rate cuts this year seem appropriate“Despite this hawkish comment, the Dollar has not reacted higher.
Mexico consumer confidence improves as attention turns to Banxico
This Wednesday, Mexican consumer confidence was published, which rose four tenths in January, rising to 47.1 points compared to 46.8 in December.
Tomorrow, Thursday, Banxico is scheduled to make its first monetary policy statement of the year, expected to keep interest rates unchanged at 11.25%. The interpretation of the statement from the Central Bank of Mexico will be very important, since investors expect a first rate cut at the March meeting.
USD/MXN price targets
Today, February 7, the Dollar in Mexico is trading at 17.03 pesos, falling 0.06% daily. In the short term, the USD/MXN is pointing downwards. A break of the important support level located at the daily low of 17.00 will open the doors to testing the 16.78 area, the 2024 low recorded on January 8. Further down, the target is located in the 16.70/16.69 zone, where the bottom is at the end of August 2023.
To the upside, the first resistance will be at this week's and last week's high, 17.28. Above, USD/MXN will encounter a strong barrier at 17.38, the highest level of 2024.
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.
