USD/MXN: Mexican Peso flexes muscle against USD, eyeing 17.0000

USD/MXN approaches the 17.00 barrier, trading at 17.0296, as traders await the Federal Reserve’s monetary policy cues.
US Dollar Index dropped 0.39% to 104.80, adding headwinds to the Greenback ahead of the Fed’s hawkish expectations.
Mexican economic data on the horizon: Retail Sales and Inflation figures to be released this week could influence Peso’s trajectory.

Christian Borjon Valencia FXStreet

The Mexican Peso (MXN) stages a comeback and appreciates against the US Dollar (USD) as traders remain on the sidelines with the Federal Reserve’s monetary policy decision looming. Although speculations for additional tightening remain, the USD/MXN pair approached the psychological 17.00 barrier, exchanging hands at around 17.0000 after hitting a daily high of 17.0974.

USD/MXN pierced the 17.00 barrier as markets eye Fed’s decision and upcoming Mexican data

The market sentiment is downbeat, as seen by US equities. US Treasury bond yields are dropping, a headwind for the US Dollar (USD). The Federal Reserve is expected to keep rates unchanged at the 5.25%-5.50% range and deliver a hawkish message. At the same time, its officials would update their economic projections, including the Federal Funds Rate (FFR) for the remainder of the year, 2024 and 2025. A downward revision to the FFR would be considered dovish, weakening the Greenback.

The money market futures show the Fed’s odds for a November rate hike are at 27% for a quarter of a percent increase, ahead of the Federal Open Market Committee (FOMC) decision. For December, the odds stand at 34.1%.

The US Dollar Index, a gauge of the buck’s value vs. a basket of six currencies, drops 0.39% and sits at 104.80, weighing on the USD/MXN pair.

Aside from this, a scarce Mexican economic docket has not been an excuse for USD/MXN sellers to step in an boost the emerging market currency. Tomorrow, the Instituto Nacional de Estadistica Geografia e Informatica (INEGI) will release Retail Sales data and Mexican Inflation on Friday.

Given the current interest rate differential between Mexico and the US favors the former, we could expect further downside in the USD/MXN.

USD/MXN Price Analysis: Technical outlook

From a technical perspective, the break below 17.0000 could pave the way for further downside, but the 50-day Moving Average (DMA) at 17.0123 is holding the fort for USD/MXN buyers. Once cleared, the next stop would be the August 28 swing low of 16.6923. On the flip side, if the pair jumps and reclaims the September 18 high of 17.1812, that would pave the way for a recovery towards the 100-DMA at 17.2007.

USD/MXN

Overview
Today last price	17.0086
Today Daily Change	-0.0731
Today Daily Change %	-0.43
Today daily open	17.0817

Trends
Daily SMA20	17.1131
Daily SMA50	17.0175
Daily SMA100	17.2163
Daily SMA200	17.9303

Levels
Previous Daily High	17.1424
Previous Daily Low	17.0548
Previous Weekly High	17.5959
Previous Weekly Low	17.0504
Previous Monthly High	17.4274
Previous Monthly Low	16.6945
Daily Fibonacci 38.2%	17.0882
Daily Fibonacci 61.8%	17.1089
Daily Pivot Point S1	17.0435
Daily Pivot Point S2	17.0054
Daily Pivot Point S3	16.956
Daily Pivot Point R1	17.1311
Daily Pivot Point R2	17.1805
Daily Pivot Point R3	17.2187

Author

Christian Borjon Valencia

FXStreet

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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