USD/MXN back above 19.10, remains unable to break under 19.00

The USD/MXN is rising modestly on Monday, on a quiet session as the US celebrated Veterans Day. As of writing trades at 19.12, after hitting at 19.07 a daily low earlier day. 

The pair continues to move in a range with support above 19.00 and resistance at 19.25. A breakout below 19.00 would likely increase the selling pressure, exposing 18.90 and the 2019 low at 18.74. On the upside, a close above 19.30 would point to further gains. 

From a fundamental perspective, the Mexican peso continues to consolidate despite record highs in Wall Street, rising US bond yields and the ongoing tensions in several Latin American countries. 

Banxico meeting on Thursday 

The Bank of Mexico is expected to lower the key interest rate by 25bps for the third time in a row on Thursday. “With core inflation falling for the fourth consecutive month and growth expectations still subdued, we expect the central bank to cut rates another 25 bps at next week’s meeting and continue easing policy into 2020. Also supporting the case for more easing from Mexico’s central bank, the Mexican peso has been relatively steady over the past month”, explained analysts at Wells Fargo. 

Markets are priced for 179 bps of additional easing over the next year by Banxico. “For comparison, markets are priced for 17 bps of additional central bank easing in the United States over the same period, and 18 bps of easing in Canada”, added Wells Fargo analysts.