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USD/MXN falls as a late boost in risk sentiment supports the Mexican Peso

  • The Mexican Peso trimmed some of its weekly losses after depreciating to 18.40 weekly.
  • US job data sparks recession fears as Initial Jobless Claims rise to 228K.
  • US Nonfarm Payrolls are expected to decelerate from February’s 311K to 240K.

The Mexican Peso (MXN) snapped three days of consecutive losses and advances against the US Dollar (USD) due to a late improvement in risk sentiment. Therefore, the USD/MXN dropped from around the 20-day Exponential Moving Average (EMA) and trades at around 18.2285, down 0.04%.

Wall Street finished the week with gains. The latest round of jobs data revealed in the United States (US) economic calendar increased the likelihood of a recession. The Initial Jobless Claims for the last week rose by 228K, crushed estimates of 200K, but trailed the previous week’s data, which was revised to 246K. Continuing claims, which smooths week-to-week changes, were little changed at 1.82 in the week ending March 25.

From the start of the week, the US PMI’s employment index has indicated that job creation is slowing down. This was confirmed by the US JOLTs Opening report, which demonstrated a decrease in job openings. As a result, there is now increased speculation that the Federal Reserve may halt its tightening cycle.

The St. Louis Fed President James Bullard said the first quarter was stronger than expected. Additionally, Bullard said inflation would be “sticky going forward” and that the Fed “needs to stay at it” to get inflation back to its 2% target.

Meanwhile, the US Dollar Index, a measure of the buck’s value vs. a basket of six currencies, edged higher towards the end of the New York session, up 0.31%, at 101.905, but failed to bolster the USD/MXN.

On the Mexican front, speculations that the Bank of Mexico (Banxico) might end its tightening cycle depreciated the MXN by 1.2% in the week. BofA Global Research strategists wrote, “Banxico dropped the hiking bias at its most recent policy decision and said that future movements would depend on the inflation outlook, which is now improving.”

“Banxico dropped the hiking bias at its most recent policy decision and said that future movements would depend on the inflation outlook, which is now improving,” BofA Global Research strategists wrote in a note.

“Banxico will likely cut when the US Fed cuts, but not before, and not more than the Fed,” BofA strategists said.

What to watch?

On Friday, the US economic docket would release the US Nonfarm Payrolls report for March, is expected to decelerate to 240K after February’s astonishing 311K. The Unemployment Rate is estimated to stay steady at 3.6%, while Average Hourly Earnings are declining to 4.3% YoY, vs. 4.6% in February.

USD/MXN Technical Levels

USD/MXN

Overview
Today last price18.2354
Today Daily Change-0.0692
Today Daily Change %-0.38
Today daily open18.3046
 
Trends
Daily SMA2018.4637
Daily SMA5018.4927
Daily SMA10018.9153
Daily SMA20019.5035
 
Levels
Previous Daily High18.4018
Previous Daily Low18.1036
Previous Weekly High18.4681
Previous Weekly Low17.99
Previous Monthly High19.2324
Previous Monthly Low17.8977
Daily Fibonacci 38.2%18.2879
Daily Fibonacci 61.8%18.2175
Daily Pivot Point S118.1382
Daily Pivot Point S217.9717
Daily Pivot Point S317.8399
Daily Pivot Point R118.4365
Daily Pivot Point R218.5683
Daily Pivot Point R318.7347

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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