- Banxico raises interest rate by 75 basic points.
- US inflation data triggers sharp drop in dollar.
- USDMXN maintains bearish outlook, runs into support at 19.30.
USDMXN is rising on Friday, having one of the best days in weeks, after the lowest daily close since February 2020. The pair closed at 19.31 and on Friday in European hours fell to 19.26, marking a new low in two years, and then bounced back to 19.46.
The USDMXN trend remains bearish, but to enable more consistent declines it will need to break below 19.30. Some consolidation below could be expected between 19.50 and 19.30, before further directional moves.
The drop to the lowest in years occurred in the face of a general weakening of the dollar as a result of lower inflation in the US, which became known on Thursday. That same day, the Bank of Mexico raised the benchmark interest rate by 75 basis points to 10%.
The vote in Banxico it was not unanimous, since a member of the Board, Gerardo Esquivel, requested an increase of 50 points. The central bank gave signs of further increases in the rate, although it will evaluate the magnitude according to the circumstances. In any case, analysts agree that the end of the cycle of increases is near. Obviously it will be necessary to see inflation with a downward trend.
If the global tone of optimism that was lit on Thursday by the US data persists, the Mexican peso could be favored, and this would also help keep inflation under control. The downside could be a sharp rebound in oil prices.
Technical levels
Source: Fx Street
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