- US Dollar upside correction against Mexican peso was short-lived.
- USD/MXN back to the 19.00 area, moving sideways.
- Key events ahead: FOMC, NFP, and Banxico.
The Mexican peso is about to end the day modestly higher against the US dollar amid an improvement in global sentiment and higher crude oil prices. The USD/MXN pair yesterday reached a 2-day high at 19.08. It failed to rise above 19.10 and pulled back to the 19.00 area.
Today it is moving sideways around 19.00 on a low volatility session. The Mexican peso was not among the top performers. “EM currencies benefited somewhat from the favourable funding conditions (stability of the USD and UST yields anchored) along with the recovery in oil prices, which rose above the 60 USD per barrel threshold. The BRL was the best performer across EM currencies”, said BBVA analysts.
On Wednesday, the Federal Reserve will announce its decision on monetary policy. A change to a more dovish tone is expected. The greenback dropped on Friday on the back of policy shift expectations. The outcome of the meeting could have a significant influence on the Mexican peso and also on Banxico.
Next week will be the turn of the Bank of Mexico meeting. Since the last meeting, the exchange rate appreciated, inflation slowed down and market volatility eased. All those factors favor a no change in rates. The key rate stands at 8.25%, the highest in more than a decade, it is an attractive level to investors, but it represents expensive funding costs to Mexican companies.
USD/MXN Levels to watch
To the upside, 19.20 is the critical resistance in the short-term (neckline of a potential double bottom at 18.87), a consolidation on top would point to a stronger US dollar correction targeting 19.30 and 19.45. On the flip side, the area around 19.85/87 capped the downside during the last two weeks and a break lower would signal more losses ahead. The next support is located at 18.70.
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
USD/JPY holds near 155.50 after Tokyo CPI inflation eases more than expected
USD/JPY is trading tightly just below the 156.00 handle, hugging multi-year highs as the Yen continues to deflate. The pair is trading into 30-plus year highs, and bullish momentum is targeting all-time record bids beyond 160.00, a price level the pair hasn’t reached since 1990.
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Ethereum could remain inside key range as Consensys sues SEC over ETH security status
Ethereum appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after Consensys filed a lawsuit against the US SEC and insider sources informing Reuters of the unlikelihood of a spot ETH ETF approval in May.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.