|

USD/MXN drops below 24.00 after Banxico cuts rates as expected

  • Mexican peso outperforms gains for the second day in a row versus US dollar.
  • Banxico cuts key interest rate from 6% to 5.5%, as expected.

The USD/MXN pair dropped following the decision of the Bank of Mexico to cut rates. As of writing, it stands below 23.90, trading at two-day lows.

Before Banxico’s announcement, the pair was moving sideways between 24.10 and 24.40, supported by a solid performance of the Mexican peso. Below 24.00, the bearish momentum intensified. The next support is seen at 23.80 followed then by 23.55. On the upside, 24.15 is the immediate resistance now and then comes the critical 24.35/40 that if broken, should lead to more gains.

Mexico's central bank moves as expected

“Taking into account the referred risks for inflation, economic activity and financial markets, major challenges arise for monetary policy and for the economy in general. Considering the room for maneuvering that on balance monetary policy has as a result of these implications, and with the presence of all its members, Banco de México’s Governing Board decided unanimously to lower the target for the overnight interbank interest rate by 50 basis points to a level of 5.5%”, said Banxico in its statement.

On the back of lower inflation and the impact on the economic activity of the coronavirus, analysts continue to see more rate cut in the short-term in Mexico.

USD/MXN

Overview
Today last price23.9954
Today Daily Change-0.2090
Today Daily Change %-0.86
Today daily open24.2044
 
Trends
Daily SMA2024.2341
Daily SMA5023.6392
Daily SMA10021.2504
Daily SMA20020.3356
 
Levels
Previous Daily High24.3928
Previous Daily Low24.0069
Previous Weekly High24.8895
Previous Weekly Low23.5515
Previous Monthly High25.7809
Previous Monthly Low23.2825
Daily Fibonacci 38.2%24.1543
Daily Fibonacci 61.8%24.2454
Daily Pivot Point S124.0099
Daily Pivot Point S223.8154
Daily Pivot Point S323.624
Daily Pivot Point R124.3959
Daily Pivot Point R224.5874
Daily Pivot Point R324.7819

Author

Matías Salord

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

More from Matías Salord
Share:

Editor's Picks

AUD/USD holds above 0.6950 as bullish USD caps gains

AUD/USD edges lower during the Asian session on Tuesday, stalling a two-day recovery move from a two-month low, touched last week. An extended rout in the fixed income market keeps US bond yields elevated near multi-year highs. This, along with geopolitical uncertainties, helps the US Dollar retain its bullish tone despite receding October Fed hike bets. However, expectations for another RBA rate hike this month could act as a tailwind for the Aussie.

USD/JPY remains confined in a range; 158.00 holds the key

USD/JPY extends its consolidative move during the Asian session on Tuesday, trading below 158.00 amid diverging forces. Hawkish BoJ expectations support the Japanese Yen amid looming intervention risks. Meanwhile, geopolitical uncertainty and elevated US bond yields keep the US Dollar near its YTD high despite receding October Fed hike bets. This, in turn, holds back traders from placing aggressive directional bets.

Gold holds steady below $4,150 as receding Fed hike bets lend support

Gold continues its struggle to gain any meaningful traction, holding steady below $4,150 during the Asian session on Tuesday. Receding October Fed hike bets act as a tailwind for the non-yielding bullion, though a bullish US Dollar caps the upside. Furthermore, traders await the release of the FOMC Minutes on Wednesday for more cues about the future policy path and some meaningful impetus.

Ethereum: BitMine scoops extra ETH tokens following Q3 outperformance
Ethereum (ETH) treasury firm BitMine Immersion continued its buying streak of the top altcoin last week. The firm acquired 15,112 ETH, lifting its holdings to 6.016 million ETH, representing 4.9% of ETH's circulating supply and worth $16.16 billion at the time of writing. That brings the company roughly 98.5% closer to acquiring 5% of ETH's supply, a goal it tags "Alchemy of 5%."
Markets just priced out rate hikes on financial stress. This chart shows why 2022-23 says they’ll be wrong

Traders have taken about one quarter-point hike out of their European Central Bank forecasts since mid-September, betting the ECB will stop raising rates because of a French debt selloff. The same bet failed twice in 2022 and 2023, when the ECB kept raising rates through financial stress because inflation was above its 2% target. Euro-area inflation came in at 3.8% in September.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.