USD/MXN moves below 17.5000 due to correction in the US Dollar, Core PCE awaited

USD/MXN retraces the winning streak that began on Monday, trading lower around 17.4480 during the European session on Friday. The pair faces downward pressure due to the correction in the US Dollar (USD).

The US Dollar Index (DXY) continues to weaken, which could be attributed to the pullback in US Treasury yields. The spot price bids lower around 105.80. The yield on the 10-year US Treasury bond stands at 4.54% by the press time.

The US Gross Domestic Product (GDP) remained steady at 2.1%, aligning with expectations. Initial Jobless Claims for the week ending on September 22 improved to 204K, a slight decrease from the previous 202K but fell short of the anticipated 215K.

US Pending Home Sales recorded a notable decline of 7.1%, surpassing the market expectation of a 0.8% fall. This decline contrasts with the previous 0.9% rise and highlights a significant swing in the housing market.

Chicago Fed President Austan Goolsbee has expressed confidence in the Federal Reserve's (Fed) ability to bring inflation back to its target. Goolsbee emphasized the unique opportunity to achieve this without a recession, underscoring the Fed's commitment to managing inflation while sustaining economic growth.

Richmond Fed President Thomas Barkin acknowledged that recent inflation data has been positive but cautioned that it is too early to predict the future course of monetary policy.

Traders await the release of the US Core Personal Consumption Expenditure (PCE) Price Index, the Fed's preferred measure of consumer inflation, scheduled for Friday. The anticipated reduction in the annual rate from 4.2% to 3.9% will be closely watched by market participants for its potential impact on the US Dollar.

On Mexico’s side, the Mexican Peso (MXN) received upward support as the Banco de México (Banxico) maintained its restrictive monetary policy stance in Thursday's meeting.

Mexico’s central bank kept interest rates unchanged at 11.25%, following the upward revision of its inflation forecasts. However, Mexico’s Jobless Rate (MoM) for August edged lower from 3.1% in July to 3.0%.