USD/MXN extends slide to fresh April 2016 lows near 17.05 after Fed announcement

• The USD/MXN reacts to the Fed’s announcement with a fall to 17.07, a new low of more than seven years.
• The Fed keeps rates unchanged at 5.25% but signals that there will be further increases before the end of the year.

He USD/MXN experienced a strong shock after the decision of the US Federal Reserve to keep rates unchanged at 5.25% with a perspective of increases in future meetings. The pair first rose to 17.20 and then fell sharply to 17.07its lowest level since April 2016.

The US Federal Reserve decided to pause pending new data. The dot plot projections raised their end-2023 terminal rate forecast to 5.6% from 5.1% forecast in March. In addition, Jerome Powell, president of the Fed, was emphatic assuring that there will be no rate cut this year and that some more increases are expected in future meetings.

The hawkish pause move favored the dollar against most of its rivals, with the Mexican peso being one of the exceptions. He DX-indexAND, which had previously fallen to 102.66, a four-week low, reclaimed the 103.00 zone, rising to 103.27. In any case, the greenback is now trading above 103.01, still losing 0.27% on the day.

While waiting to digest the statement, projections and words from Powell, USD/MXN traders will be awaiting tomorrow’s May retail sales and industrial production data, as well as weekly jobless claims. and the Empire Manufacturing Index for June.

USD/MXN Levels

With USD/MXN trading at time of writing above 17.12 losing 0.56% daily, the next support expected at 17.05floor of April 29, 2016, which will be followed by the psychological zone of 17.00which should emerge from the containment barrier.

On the upside, the 17.30/35 region, where the current week’s highs are, emerges as resistance. Higher up, the zone to overcome is at 17.40/45, where the highs of June 6 and 8 are. If it jumps above, the cross can move towards around 17.60, former support and the highest level of last week.