- The Mexican peso bounces up from daily lows and turns positive on the day.
- Mexican economic figures disappointed this week, boosting speculation of a Banxico rate cut on Thursday.
- The USD/MXN pair keeps trading within the weekly range, with upside attempts limited below 20.30.
The Mexican Peso (MXN) has turned positive on the daily chart and is posting marginal gains on Friday favored by a US Dollar reversal. This keeps the USD/MXN pair practically flat on the week after having wavered above the key 20.00 level with the US Dollar supported by a sharp recovery of US Treasury yields.
US Jobless Claims figures released on Thursday cemented hopes that the Federal Reserve (Fed) will cut rates next week, but the higher Producer Price Index (PPI) figures made traders increasingly convinced that next year's easing will be very gradual.
Mexican data, on the contrary, disappointed this week. The Industrial Output in October deteriorated beyond expectations, and consumer inflation eased more than forecasted in November. These figures have endorsed the view that the Bank of Mexico will cut rates for the fourth consecutive time next week.
Daily digest market movers: MXN suffers on downbeat Mexican data and USD strength
- The US Dollar Index keeps marching higher, on track for a 1% increase this week, boosted by higher US yields. The benchmark 10-year yield has gained 20 basis points this week to reach levels above 4.30% for the first time in three weeks.
- US Consumer and Producer inflation accelerated this week, showing that price pressures are picking up. This scenario is likely to limit the scope for Fed easing next year.
- The CME Fed Watch tool shows that the market is nearly fully pricing a 25 bps rate cut after the December 17-18 meeting. However, for next year, the market is leaning toward two more cuts, with the option of three cuts losing support.
- In Mexico, Thursday’s data revealed that the Industrial Production contracted by 1.2% in October, beyond market expectations of a 0.2% decline. Year-on-year, the Industrial Output declined 2.2% instead of the 0.6% expected. Data released in September showed a 0.6% monthly increase and a 0.3% decline in the previous 12 months.
- Earlier this week, Mexican consumer prices eased at a 4.55% yearly rate from 4.76% in October, beyond market expectations of a 4.59% reading. Likewise, the monthly CPI eased 0.44%, below the 0.48% expected, from 0.55% in the previous month.
Mexican Peso technical outlook: USD/MXN remains trading capped below the 20.30 area
The USD/MXN pair has bounced up from an important support level at the psychological 20.00 area, but it remains trading within the weekly range below the December 5 and 10 high at 20.30.
The pair’s short-term bias remains bearish as long as the mentioned 20.30 resistance remains in place. The double top at 20.80 suggests the possibility of a deeper correction.
A confirmation above 20.30 would shift the focus towards the December 2 high at 20.60 before November’s peak at around 20.80. On the downside, the 20.00 level is holding bears. Below here, the October 24 and November 7 low at 19.75 is likely to be targeted.
USD/MXN 4-Hour Chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from the Bank for International Settlements. Following the Second World War, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold until the Bretton Woods Agreement in 1971, when the Gold Standard went away.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD accelerates losses to 1.0930 on stronger Dollar
The US Dollar's recovery regains extra impulse sending the US Dollar Index to fresh highs and relegating EUR/USD to navigate the area of daily troughs around 1.0930 in the latter part of Friday's session.
GBP/USD plummets to four-week lows near 1.2850
The US Dollar's rebound keep gathering steam and now sends GBP/USD to the area of multi-week lows in the 1.2850 region amid the broad-based pullback in the risk-associated universe.
Gold trades on the back foot, flirts with $3,000
Gold prices are accelerating their daily decline, steadily approaching the critical $3,000 per troy ounce mark as the Greenback's rebound gains extra momentum and US yields tighten their retracement.
Can Maker break $1,450 hurdle as whales launch buying spree?
Maker holds steadily above $1,250 support as a whale scoops $1.21 million worth of MKR. Addresses with a 100k to 1 million MKR balance now account for 24.27% of Maker’s total supply. Maker battles a bear flag pattern as bulls gather for an epic weekend move.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.