USD/MXN depreciates to near 17.23 due to downbeat US yields, focus on US PMI

USD/MXN snaps a two-day winning streak ahead of US PMI data
The decline in the US bond yields undermines the US Dollar.
Banxico’s former Governor Agustin Carstens suggested being cautious before making policy decisions.

Akhtar Faruqui FXStreet

USD/MXN moves in a downward direction after registering gains in the previous two sessions. The USD/MXN pair trades lower near 17.23 during the European session on Wednesday. The US Dollar (USD) experiences a decline, attributed to a decrease in US bond yields, which may be influenced by expectations of the Federal Reserve (Fed) initiating rate cuts starting in May. The market is fully pricing in a 25 basis point (bps) cut in interest rates for May.

Additionally, former St. Louis Fed President James Bullard presented his perspective, proposing the possibility of the Federal Reserve (Fed) implementing interest rate cuts even before inflation reaches the 2.0% threshold. Bullard speculates that these cuts could potentially take place as early as March.

Agustin Carstens, the former Governor of the Bank of Mexico (Banxico) emphasized the importance of not lowering interest rates prematurely. He stated "Recent developments allow policymakers to look at the future with cautious optimism." Carstens' comments suggest a measured approach to monetary policy decisions in response to current economic conditions.

The performance of the Mexican Peso (MXN) could be significantly influenced by factors associated with the United States (US), according to TD Securities. The interconnection between the Mexican Peso and US-related factors underscores the importance of monitoring developments in the US economy for insights into the trajectory of the MXN.

Looking forward, the Bank of Mexico (Banxico) is scheduled to release the first half-month inflation data for January on Wednesday. This data release is anticipated to provide valuable information about inflation trends in Mexico, which can impact Banxico's decisions regarding interest rates and monetary policy in the upcoming meetings.

USD/MXN: technical levels to watch

Overview
Today last price	17.2335
Today Daily Change	-0.0859
Today Daily Change %	-0.50
Today daily open	17.3194

Trends
Daily SMA20	17.0241
Daily SMA50	17.1386
Daily SMA100	17.4267
Daily SMA200	17.3583

Levels
Previous Daily High	17.3863
Previous Daily Low	17.1546
Previous Weekly High	17.3871
Previous Weekly Low	16.8468
Previous Monthly High	17.5653
Previous Monthly Low	16.8611
Daily Fibonacci 38.2%	17.2978
Daily Fibonacci 61.8%	17.2431
Daily Pivot Point S1	17.1873
Daily Pivot Point S2	17.0552
Daily Pivot Point S3	16.9557
Daily Pivot Point R1	17.4189
Daily Pivot Point R2	17.5184
Daily Pivot Point R3	17.6506

Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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