USD/MXN jumps above 19.00 to test October highs

Mexican peso accelerates slide against US dollar on the back of risk aversion.
USD/MXN challenges October highs at 19.20.

Matías Salord FXStreet

The USD/MXN rose significantly for the second day in-a-row boosted by a rally of the greenback and also affected by comments from US President Trump regarding immigration from Mexico.

Technical indicators point higher but...

The pair climbed from 18.85 and peaked during the American session at 19.18, the highest level in a week. From the top pulled back modestly and it was about to end the day hovering around 19.15, with the bullish tone intact. The greenback broke relevant short-term technical levels like 18.90 and 19.05. The rally was capped near the 19.20 area that is a strong barrier. A consolidation on top of the mentioned zone could clear the way to more gains with a potential target at 19.35.

The momentum remains positive but USD/MXN needs to hold on top of 19.20 to clear the way to more gains, a failure to do so would signal a continuation of the current consolidation range between 19.20 and 18.70.

Banxico minutes

Today, the Bank of Mexico released the minutes of its latest meeting when it kept inters rates unchanged at 7.75% on a divided decision. Board member Manuel Ramos-Francia voted for a 25 basis point rate hike back then due to the persistence of core inflation. Banxico officials consider they may need to raise rates again if high inflation persists. For the first time, the minutes showed how each member voted and why.

The Mexican central bank expects inflation to decline more slowly than previously expected amid increases in energy prices. All members considered that inflation risks are to the upside.

Trump triggered MXN slide

Earlier today, the Mexican peso started to decline after US President Trump threatened to close the southern border with Mexico over immigration issues. Trump wrote: "I must, in the strongest of terms, ask Mexico to stop this onslaught - and if unable to do so I will call up the U.S. Military and CLOSE OUR SOUTHERN BORDER!" and “"The assault on our country at our Southern Border, including the Criminal elements and DRUGS pouring in, is far more important to me, as President, than Trade or the USMCA. Hopefully Mexico will stop this onslaught at their Northern Border."

The immigration issue was also discussed in Mexico. President elect Andrés Manuel López Obrador mentioned that he wants to avoid repression against migrants while at the same time, also avoid a conflict with the US. "We will offer jobs, work to Central Americans. Anyone who wants to work in our country will have help, will have a work visa,” said AMLO.

Author

Matías Salord

FXStreet

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.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold holds above $5,000 as bears seem hesitant amid Fed rate cut bets

Gold edges lower at the start of a new week, though it defends the $5,000 psychological mark through the Asian session. The underlying bullish sentiment is seen acting as a headwind for the bullion. However, bets for more rate cuts by the Fed, bolstered by Friday's softer US CPI, keep the US Dollar bulls on the defensive and continue to support the non-yielding yellow metal as the focus now shifts to FOMC Minutes on Wednesday.

Week ahead: Data blitz, Fed Minutes and RBNZ decision in the spotlight

The US jobs report for January, which was delayed slightly, didn’t do the dovish Fed bets any favours, as expectations of a soft print did not materialize, confounding the raft of weak job indicators seen in the prior week.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.