- Mexican peso ends week higher versus US dollar despite Fed rate hike, ahead of Banxico.
- USD/MXN testing support at 18.70, below could drop to 18.50.
The Mexican peso rose on Friday against the US dollar and was about to end the week and the quarter on a strong note. The currency climbed supported by a positive tone around emerging market currencies and also by higher crude oil prices.
The USD/MXN ended lower the week despite another rate hike from the Federal Reserve. What the US central bank did, was already priced in. The tone of the statement and the projections did not create tensions across emerging markets.
The peso also showed resilience despite the lack of resolution regarding the trade deal between the US and Canada. The fact that the US and Mexico already reached a deal offset major concerns. Another positive factor over the week for MXN was the rally in crude oil prices; the WTI barrel rose almost 4%.
After Fed, comes Banxico
Next Thursday is the meeting of the Bank of Mexico. There is not a unanimous consensus about what Banxico would do. The stabilization of the exchange rate and the expectations that inflation will slowdown removed pressure from the central bank to raise rates again. Some analysts expect Banxico to hike the key rate to 8.0%, following the Fed.
On Friday, it was informed that economist Johnathan Heath, would be nominated for central bank deputy governor. The report was received as a positive in markets. The election is taken by the president-elect administration. Over López Obrador six-year presidential term, he will get to nominate three deputy governors and the governor.
USD/MXN Technical levels
The pair ended the week around 18.70 that is a relevant support level. A consolidation below that level would clear the way to more losses, targeting 18.50. Between 18.40 and 18.50 there is a strong barrier that is likely to cap the downside but if broken, the outlook would favor more gains to the peso.
To the upside, if USD/MXN holds above 18.70 it could correct higher. Only a firm break above 19.05 would change the current neutral to bearish short-term bias.
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.
Recommended content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.