- Despite Fed Chairman Jerome Powell’s hawkish tone, USD/MXN dipped to 17.0651, shedding 0.09%.
- Powell stressed the resilience of the US economy and the possibility of further tightening, despite the weakness in the labor market.
- USD/MXN continues to fall, holding just above the daily low of 17.0452, unaffected by Powell’s remarks.
He USD/MXN extends its losses beyond 17.1000, falling for the fourth day in a row, after hitting a daily high of 17.1231 amid hawkish comments from US Federal Reserve (Fed) Chairman Jerome Powell in a panel organized by the European Central Bank (ECB). The USD/MXN pair is trading at 17.0651, down 0.09%.
The Mexican Peso remains stable while the dollar experiences losses, extending the bearish trend of the USD/MXN for the fourth consecutive day
Wall Street is trading mixed, as the S&P 500 and Dow Jones both post minuscule losses amid the US government’s restriction on China to make NVIDIA chips. Meanwhile, Fed Chairman Jerome Powell declared that monetary policy “has not been tight for a long time,” noting that most Fed officials continue to see further tightening, as seen in the Fed report. points. Powell commented that the US economy remains resilient, based on the latest data, and played down a possible recession. He added that the US central bank needs to see more easing when it comes to the labor market.
Following Powell’s hawkish comments, USD/MXN did not stop its slide, although it remains slightly above the daily low of 17.0452.
As for the data, the US trade deficit contracted 6.1% to 91.1 billion dollars, compared to 97.1 billion in April, as shown by the US Department of Commerce. Sources cited Per Reuters commented: “Even with May’s narrowing, the goods trade deficit is up more than 10% since March, and trade will likely be a drag on economic growth in the second quarter.”
On the Mexican front, an absent economic calendar keeps traders aware of market sentiment and the dynamics surrounding the dollar. The decision of the Bank of Mexico (Banxico) to keep rates unchanged at 11.25% in the latest monetary policy decision was expected to weaken the Mexican peso (MXN). But the interest rate differential with other currencies makes the carry trade attractive as Banxico is expected to keep borrowing costs higher for longer.
Against this background, the USD/MXN bearish trend remains intact, influenced by economic factors. The only way the pair could change gears is a central bank divergence, such as a rate cut by Banxico and a rate hike by the Fed, which would narrow the interest rate spread. . Another factor that could prevent a further appreciation of the MXN would be a recession in the United States (US), which would cause an increase in capital outflows from emerging markets towards safe haven assets.
Upcoming events
Initial jobless claims, GDP data, housing data and a series of speakers from the Federal Reserve will be announced on the US economic calendar.
USD/MXN Price Analysis: Technical Perspective
USD/MXN is biased lower but is trading sideways, capped to the upside by the June 23 high of 17.2644 and support at the year-to-date low of 17.0215. A break of the latter would expose 17.00, followed by the October 2015 low of 16.3267. On the other hand, a break above the June 23 high will expose the May 17 low at 17.4038, seen as intermediate resistance, before testing the 50 and 100 day EMAs each at 17.5409 and 17.9352, respectively.
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.
