- The Mexican Peso appreciates against the US Dollar ahead of the FOMC’s meeting.
- An upbeat sentiment in the financial markets was one of the main reasons the USD/MXN fell.
- The US Treasury bond yield recovery began to reflect a 25 bps rate hike by the Fed.
- USD/MXN Price Analysis: Could resume downwards if it conquers 18.60; otherwise, upside risks remain.
The Mexican Peso (MXN) strengthens against the US Dollar (USD) courtesy of an upbeat sentiment amongst investors after Wall Street’s three major indices opened with gains. Therefore, the USD/MXN pair extended its losses below Monday’s low of 18.7857, though the 50-day EMA at 18.6820 capped the US Dollar losses. At the time of writing, the USD/MXN is trading at 18.7673, down 0.24%.
USD/MXN drops on risk-appetite, traders eyeing Fed’s decision
Sentiment remains upbeat. The financial markets narrative changed from inflation to a banking and credit crisis after the failure of two banks in the United States and another at the brisk of default. That has shifted global central banks’ interest rate increases expectations, with traders foreseeing that the Fed could cut rates in the year.
Money market futures expect the Fed to hike 25 bps, with odds at 83.4%, compared to Monday’s 73.8%. Nevertheless, uncertainty around how Fed Chair Jerome Powell’s press conference will go could rock the boat in the financial markets.
Societe Generale economists foresee a 25 bps rate hike
Delving a little deep into Jerome Powell’s press conference, Societe Generale analysts said, “the language around inflation and guidance on interest rates will take precedence over the next 48 hours. The Fed must err on the side of caution, and this means toning down the hawkish narrative until confidence in bank liquidity has been restored. SG economists forecast a +25bp hike, while the market is pricing in nearly 26% probability of a pause.”
Given the backdrop, the USD/MXN might consolidate around current exchange rates. The lack of economic data from Mexico would keep traders leaning into the dynamics of the US Dollar.
The US Dollar Index continues to edge lower, down 0.17%, at 103.132. US Treasury bond yields responded to expectations for a rate hike, with 2s and 10s up 16 and 9 bps each, at 4.148% and 3.579%, respectively.
Of late, Existing Home Sales in the United States in February rose 14.5% MoM, above estimates of 5%, the biggest increase since July 2020, and finished one full year of declines in sales.
USD/MXN Technical analysis
After failing to hold to gains above 19.0000, the USD/MXN resumed its downtrend, clearing the 100-day Exponential Moving Average (EMA) support at 18.9846. However, it should be said that the USD/MXN moved from trading within the low 18.00s to 18.10s towards the 18.60-18.90s area. Oscillators like the Relative Strength Index (RSI) and the Rate of Change (RoC) are still bullish, but RSI’s slope shifted downwards, suggesting that buying pressure is waning.
If the USD/MXN resumes upwards, the first resistance would be the 100-day EMA at 18.9848, followed by the $19.00. A breach of the latter will expose the weekly high at 19.2327. for a bearish resumption, the USD/MXN needs to crack $18.60, so sellers could have a chance to test the 20-day EMA at 18.5635 before diving toward $18.00.
|Today last price||18.7468|
|Today Daily Change||-0.0763|
|Today Daily Change %||-0.41|
|Today daily open||18.8231|
|Previous Daily High||19.2324|
|Previous Daily Low||18.7879|
|Previous Weekly High||19.1812|
|Previous Weekly Low||18.2397|
|Previous Monthly High||19.2901|
|Previous Monthly Low||18.2954|
|Daily Fibonacci 38.2%||18.9577|
|Daily Fibonacci 61.8%||19.0626|
|Daily Pivot Point S1||18.6632|
|Daily Pivot Point S2||18.5033|
|Daily Pivot Point S3||18.2187|
|Daily Pivot Point R1||19.1077|
|Daily Pivot Point R2||19.3923|
|Daily Pivot Point R3||19.5522|
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.
Follow us on Telegram
Stay updated of all the news
EUR/USD remains depressed near 1.0700 ahead of Lagarde, US data
EUR/USD is trading close to 1.0700, on the defensive in the European session. The US Dollar is extending post-US NFP gains amid cautious optimism, as investors assess the Fed rates outlook. Eurozone Sentix data slumps to -17.1 in June. Lagarde, US data awaited.
GBP/USD drops below 1.2400 amid firmer US Dollar
GBP/USD is falling below 1.2400 amid a notable US Dollar demand, dragging the major lower for the second successive day on Monday. Markets repricing of the Fed interest rates outlook push the US Treasury bond yields higher, in turn, the US Dollar. US ISM Services PMI next of note.
Gold finds short-term cushion above $1,940, more downside looks solid
Gold price has found a short-term cushion near $1,943.00, however, more downside seems favored. Gold price witnessed an intense sell-off after a mean-reversion move to near the 200-period EMA at $1,977.32.
Pro-XRP attorney says Ripple has 25% chance of winning against SEC, Judge could announce verdict by September
Ripple has a 25% chance of winning its legal battle against the US SEC, according to pro-XRP attorney John Deaton. Over the weekend, Deaton shared his opinion on Ripple’s likelihood of both an outright win and a partial victory.
Services PMIs the next focus after last week’s bumper US jobs report
While US markets finished the week on a high, after another bumper jobs report and a positive week across the board, markets in Europe, while finishing the week on a high, struggled to match the exuberance of investors on the other side of the Atlantic.