- The USD/MXN pair is approaching the 17.00 barrier and is trading at 17.0296, as traders await monetary policy signals from the Federal Reserve.
- The Dollar Index fell 0.39% to 104.80, which was a brake on the USD, pending the Fed’s expectations.
- Mexico’s economic data on the horizon: Retail sales and inflation figures to be published this week could influence the trajectory of the Peso.
He Mexican peso (MXN) rises and can be seen in front of the US dollar (USD), while traders remain on the sidelines in the face of the Federal Reserve’s imminent monetary policy decision. Although there is still speculation about a tightening of monetary policy, the USD/MXN pair approached the psychological level of 17.00, trading around 17.0000 after reaching a daily high of 17.0974.
USD/MXN surpassed the 17.00 barrier, while markets are attentive to the Fed’s decision and the next data from Mexico
Market sentiment is bearish, as seen in US stocks. US Treasury yields are falling, a headwind for the US dollar (USD). The Federal Reserve is expected to keep rates unchanged in the 5.25%-5.50% range and issue a hawkish message. At the same time, its officials would update their economic projections, including the Federal Funds Rate (FFR) for the remainder of the year, 2024 and 2025. A downward revision of the FFR would be considered moderate, which would weaken the Dollar.
Money market futures show the odds of the Fed raising rates in November stand at 27% for a quarter percentage point hike, ahead of the Federal Open Market Committee (FOMC) decision. For December, the probabilities stand at 34.1%.
The Dollar Index, an indicator of the value of the Dollar against a basket of six currencies, fell 0.39% and stood at 104.80, weighing down the USD/MXN pair.
On the other hand, the limited Mexican economic agenda has not been an excuse for USD/MXN sellers to intervene, boosting the emerging market currency. Tomorrow, the National Institute of Geography and Informatics Statistics (INEGI) will publish retail sales data and on Friday Mexican inflation.
Since the current interest rate differential between Mexico and the US favors the former, we could expect further declines in the USD/MXN.
USD/MXN Price Analysis: Technical Outlook
From a technical point of view, the break below 17.0000 could pave the way for further decline, but the 50-day moving average (DMA) at 17.0123 is holding the fort for USD/MXN buyers. Once broken, the next stop would be the August 28 low at 16.6923. On the other hand, if the pair jumps and reclaims the September 18 high at 17.1812, this would pave the way for a recovery towards the 100-DMA at 17.2007.
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.
