- USD/MXN rises to 1-month highs, targets 20.50.
- Mexican peso remains under pressure, among the weakest of the week.
- Mexico: inflation reaches 7.7% annually, the maximum in 21 years.
The USD/MXN is rising significantly for the second day in a row, driven by the strength of the dollar in the expectation of a stronger monetary tightening by the Federal Reserve. The price climbed to 20.38, the highest level since March 22.
The dollar gets the looks
Comments from Jerome Powell, the president of the Federal Reserve on Thursday, contributed to the market seeing as a fact that at the next FOMC meeting to be held on May 3 and 4, there will be a 50 basis point rise in the interest rate. This played in favor of the dollar and caused a drop in the equity markets.
In turn, the negative climate in the stock markets weakens the Mexican peso, which is among the ones that fell the most in the last seven days.
In Mexico Inflation data for the middle of the month was released. “In the first fortnight of April 2022, the National Consumer Price Index (INPC) registered a variation of 0.16% compared to the previous fortnight. With this result, annual headline inflation stood at 7.72%. In the same period of 2021, the fortnightly inflation was 0.06% and the annual one was 6.05%”, reported the INEGI. The annual rate is the highest in 21 years and continues to put pressure on the Bank of Mexico.
The USD/MXN picture is bullish and although it has already risen quite a bit in two sessions, there are no signs of consolidation or correction yet. The 20.40 area is relevant support that includes the 200 day moving average. A close above will leave the dollar pointing higher. In the opposite direction, 20.20 is now the first support to watch, followed by 19.98, the 20-day moving average.
Technical levels
Source: Fx Street
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