- Mexican Peso appreciates following Mexico and US data.
- Banxico minutes reveal potential for interest rate adjustments as inflation is expected to converge by Q4 2025.
- US inflation data misses estimate, pushing US Treasury yields and USDollar Index lower.
- Mixed US data and strong carry trade demand keeping Peso resilient against weakening Greenback.
The Mexican Peso rallies against the US Dollar after the Bank of Mexico (Banxico) revealed its last meeting minutes. Additionally, US inflation data came in softer than expected, opening the door for the Fed to lower borrowing costs. The USD/MXN trades at 17.75, printing losses of 0.43%.
Banxico’s June minutes showed that the board foresees an inflationary environment that may allow for discussing adjustments to interest rates. They acknowledged that the labor market remains robust, yet growth has shown signs of moderation.
Some members project growth to be lower than expected as Mexico’s economic activity has been weak since the end of 2023. Most policymakers mentioned that inflation will converge toward the target in the last quarter of 2025.
Across the border, US Treasury bond yields and the Greenback tanked as US inflation was softer than expected, while the number of Americans filing for unemployment claims came below estimates and the previous reading.
The US Dollar Index (DXY), which tracks the value of a basket of six currencies against the US Dollar, tanks more than 0.50% and is down at 104.41. The US 10-year Treasury note is slipping more than 10 basis points (bps) at 4.17%, a level last seen on March 13, 2024.
Mixed US data helped to cap American currency losses against the Peso, which had remained one of the most sought carry-trade currencies.
Daily digest market movers: Mexican Peso ignores dovish-tilted Banxico minutes
- Banxico’s board members added that services inflation does not show a clear downward trend, which was one of the reasons for keeping rates unchanged at the June meeting.
- They commented that trading conditions experienced significant disruptions and added that the Mexican Peso depreciated considerably.
- Mexico’s June inflation figures were higher than expected due to a rise in food prices when most economists expect Banxico to resume lowering interest rates.
- June US Consumer Price Index (CPI) contracted -0.1% MoM, below estimates of a 0.1% increase. Core CPI ticked lower, down a tenth from 0.2% in May, and the consensus was 0.1% MoM in June.
- In the 12 months to June, headline CPI was 3%, down from 3.3%, and underlying inflation was below estimates, and the previous month's 3.4% came at 3.3%.
- Initial Jobless Claims for the week ending July 6 missed the mark and came in better than the consensus of 236K at 222K, lower than the previous reading of 239K.
- According to the CME FedWatch Tool data, odds for a September cut are 84%, up from 72% on Wednesday.
Technical analysis: Mexican Peso edges higher as USD/MXN tumbles below 17.80
The USD/MXN downtrend remains in play, though Thursday’s price action has seen some consolidation within the 17.70-17.90 area. Even though momentum remains bearish, the Relative Strength Index (RSI) flipped flat at bearish territory, hinting that sellers are taking a respite.
In the event of a bearish continuation, bears need to clear the 17.70 mark. Once surpassed, the next stop would be the confluence of the December 5 high and the 50-day Simple Moving Average (SMA) near 17.56/57, followed by the 200-day SMA at 17.26. The next floor level would be the 100-day SMA at 17.19.
Conversely, USD/MXN buyers need to clear the June 24 cycle low of 17.87 turned resistance before challenging the psychological 18.00 figure. Further upside is seen above the July 5 high at 18.19, followed by the June 28 high of 18.59, allowing buyers to challenge the YTD high of 18.99.
Economic Indicator
Consumer Price Index (MoM)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM figure compares the prices of goods in the reference month to the previous month.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Last release: Thu Jul 11, 2024 12:30
Frequency: Monthly
Actual: -0.1%
Consensus: 0.1%
Previous: 0%
Source: US Bureau of Labor Statistics
The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
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 retreats from multi-month tops, back near 1.1050
Following a move to six-month highs in the 1.1140-1.1150 band, EUR/USD now gives away part of those gains on the back of a mild attempt of recovery in the US Dollar as investors continue to assess President Trump's recent annoucements.

GBP/USD off highs, remains well bid near 1.3100
GBP/USD now partially sets aside its earlier advance in favour of fresh peaks just north of the 1.3200 mark, challenging the 1.3100 neighborhood on the back of a tepid bounce from recent multi-month lows in the Greenback.

Gold looks offered near $3,100
Prices of Gold remain on the defensive on Thursday, hovering around the $3,100 region per troy ounce and retreating from earlier all-time peaks near the $3,170 level, all against the backdrop of investors' assessment of "Liberation Day".

SOL is the winner as Solana chain turns into battleground for meme coin launchpad and DEX
Solana (SOL) gains nearly 2% in the last 24 hours and trades at 118.28 at the time of writing on Thursday. A Decentralized Exchange (DEX) and a meme coin launchpad built on the Solana blockchain have waged a war for users and compete for the trade volume on the chain.

Trump’s “Liberation Day” tariffs on the way
United States (US) President Donald Trump’s self-styled “Liberation Day” has finally arrived. After four straight failures to kick off Donald Trump’s “day one” tariffs that were supposed to be implemented when President Trump assumed office 72 days ago, Trump’s team is slated to finally unveil a sweeping, lopsided package of “reciprocal” tariffs.

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.