|

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. 

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

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

EUR/USD treads water above 1.1850 amid thin trading

EUR/USD stays defensive but holds 1.1850 amid quiet markets in the European hours on Monday.  The US Dollar is struggling for direction due to thin liquidity conditions as US markets are closed in observance of Presidents' Day. 

GBP/USD flat lines as traders await key UK and US macro data

GBP/USD kicks off a new week on a subdued note and oscillates in a narrow range near 1.365 in Monday's European trading. The mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.

Gold sticks to intraday losses; lacks follow-through

Gold remains depressed through the early European session on Monday, though it has managed to rebound from the daily trough and currently trades around the $5,000 psychological mark. Moreover, a combination of supporting factors warrants some caution for aggressive bearish traders, and before positioning for deeper losses.

Bitcoin, Ethereum and Ripple consolidate within key ranges as selling pressure eases

Bitcoin and Ethereum prices have been trading sideways within key ranges following the massive correction. Meanwhile, XRP recovers slightly, breaking above the key resistance zone. The top three cryptocurrencies hint at a potential short-term recovery, with momentum indicators showing fading bearish signs.

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.