- USD/MXN sinks to a fresh yearly low of 16.7181 amid weaker-than-expected US Retail Sales and industrial production figures.
- Greenback defensive as US Dollar Index slips 0.07%; US Treasury bond yields also experience a dip.
- Market awaits Mexican Retail Sales data; a risk of ‘hard landing’ in the US may impact emerging market currencies.
USD/MXN tumbled to fresh yearly lows of 17.6899 early in the North American session after the greenback (USD) softened amidst the US Department of Commerce revealed June’s Retail Sales report. The USD/MXN is trading at 16.7181, with losses of 0.03%.
Weak US Industrial Production and Retail Sales boosted the Mexican Peso
Key economic data revealed before Wall Street opened exacerbated the USD/MXN’s fall toward new yearly lows. US Retail Sales for June rose by 0.2% MoM, below estimates of 0.5%, while excluding autos, the so-called core Retail Sales missed the 0.3% forecasts and jumped by a modest 0.2% MoM. In other data revealed by the US Federal Reserve (Fed), industrial Production tanked, with monthly figures sliding -0.5% MoM, below estimates of 0%. At the same time, annually based, market participants projected a 1.1% expansion, though data plunged -0.4 percent in data revealed from June.
Following the data release, the USD/MXN continued to trend lower while the buck remained defensive. The US Dollar Index (DXY), a gauge of the US Dollar against a basket of peers, stands at 99.817, down 0.07%.
US Treasury bond yields dropped as the US 2-year Treasury note yields 4.715%, three basis points below its opening price. The 10-year benchmark note sits at 3.760% and slides five basis points.
The agenda in Mexico remained empty, with Retail Sales expected to be released on Thursday. Annually figures for May are expected to decelerate from 3.8% to 3.5%, while for monthly numbers, analysts foresee a deeper slowdown to 0.3% from April’s 1.5%.
Given the backdrop, the USD/MXN bias remains tilted downwards, though the overextended fall could find some support at around the 16.30/50 area if the current YTD low is broken. The interest rate differential favors the Mexican Peso (MXN) vs. the US Dollar (USD). But any US inflation surprises, or a risk of a ‘hard landing’ increasing in the US, could spur a flight to safety, weighing on the emerging market currency.
USD/MXN Price Analysis: Technical outlook
The daily chart shows the USD/MXN as poised to the downside. The Relative Strength Index (RSI) indicator remains at oversold territory, with no intentions to get back above the 30 levels, while the three-day Rate of Change (RoC) portrays sellers jumping in after flashing signs of selling pressure abating. Nevertheless, selling pressure remains weaker than the prior’s day, as revealed by the RoC. That said, the USD/MXN first support emerges at 16.5000, followed by the confluence of the 200-month EMA at 16.3000, nearby the October 2015 swing low of 16.3267. On the flip side, the USD/MXN first resistance would be the 20-day EMA at 17.0032.
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 bounces from daily lows, returns to comfort zone around 1.0750
EUR/USD bounced amid broad US Dollar weakness following the release of US employment-related data. Initial Jobless Claims unexpectedly surged in the first week of May, undermining demand for the American currency.
GBP/USD battles 1.2500 post-BOE as USD turns south
GBP/USD fell towards 1.2440 as the Bank of England left monetary policy unchanged, pointing to delayed yet potentially steeper rate cuts. The pair bounced nicely in the American session as an improving mood undermines demand for the US Dollar.
Gold jumps towards $2,330 on sudden USD weakness
XAU/USD trades within familiar levels but turned north early in the US session amid a sudden USD decline, resulting from discouraging US employment-related data as Initial Jobless Claims unexpectedly increased in the week ended May 3. Easing T-yields add to Gold gains.
Solana meme coins TREMP, BODEN rise after Donald Trump’s pro-crypto stance
Solana-based meme coins TREMP and BODEN post nearly 125% and 7% gains on Thursday. Former US President Donald Trump says his campaign will likely accept crypto donations.
Bank of England inches one step closer to a summer rate cut
The Bank of England is undoubtedly turning more optimistic, but it’s keeping its options open amid some uncertainty surrounding the near-term inflation numbers. We still narrowly expect the first rate cut in August.