- Mexican peso among worst performers of the week.
- USD/MXN about to post biggest weekly gain since September.
The USD/MXN pair is consolidating weekly gains hovering around 19.40. On Friday, it moved sideways, showing no significant moves. Over the week, it gained more than 1%, having the best performance since September.
The combination of a stronger US dollar, particularly against Latin American currencies and technical factors pushed USD/MXN to the upside. Also there was an increase in the risks emerging from the lack of resolution in the US Congress regarding US-Canada-Mexico trade deal and also from the US-China negotiation.
“In the near-term, fiscal austerity measures will continue to constrain growth. The government appears overly optimistic on domestic oil production, as well as on projected growth figures for 2020. Taken together with the expected deceleration in US growth and negative fixed investment trends, the risks to the downside for the Mexican economy are accumulating. We expect that Banxico will increase the pace and magnitude of rate cuts as the output gap widens, which should put downside pressure on the MXN”, explained Luis Hurtado, analyst at CIBC. They forecast USD/MXN at 20.1 during the first quarter of next year and at 20.6 during the third.
From a technical perspective, USD/MXN rebounded from a strong long term support breaking a descendant line, reinforcing the bullish tone. The pair is about to post the first weekly close above the 20 simple moving average (19.32) pointing toward more gains but it needs first to break and hold on top of 19.50. The critical support is located around 19.00/05, below that level a slide toward 18.75 seems likely.
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 holds above 1.0650 after US data
EUR/USD retreats from session highs but manages to hold above 1.0650 in the early American session. Upbeat macroeconomic data releases from the US helps the US Dollar find a foothold and limits the pair's upside.
GBP/USD retreats toward 1.2450 on modest USD rebound
GBP/USD edges lower in the second half of the day and trades at around 1.2450. Better-than-expected Jobless Claims and Philadelphia Fed Manufacturing Index data from the US provides a support to the USD and forces the pair to stay on the back foot.
Gold is closely monitoring geopolitics
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court
Ripple (XRP) price hovers below the key $0.50 level on Thursday after failing at another attempt to break and close above the resistance for the fourth day in a row.
Have we seen the extent of the Fed rate repricing?
Markets have been mostly consolidating recent moves into Thursday. We’ve seen some profit taking on Dollar longs and renewed demand for US equities into the dip. Whether or not this holds up is a completely different story.