Key Points:
- USD/MXN rate fell to 16.99, a 0.81% drop, with the 200-day SMA crossed at 17.16.
- Positive trends in Mexico’s economy contrast with the US slowdown, influencing the peso’s strength.
- Bank of Mexico’s steady rate at 11.00% with a potential cut in June, forecast end-year rate at 10.00%.
The USD/MXN currency pair currently stands at a rate of 16.99, reflecting a decrease of 0.81%. This movement suggests a weakening of the US dollar against the Mexican peso. The key technical monitoring levels include the 200-day simple moving average (SMA) at 17.16, which the currency pair recently dipped below, and the 100-day and 50-day SMAs at 16.96 and 16.81, respectively. These levels indicate short to mid-term trends and potential support zones. Regarding resistance, the pair faces significant hurdles at 17.38 and 17.56, corresponding to the highs from January 2023 and December 5, 2022. The psychological round figure of 18.00 remains a distant but critical resistance level.
Positive Economic Trends in Mexico Challenge CPI Concerns
Recent economic indicators from Mexico show a positive trend, with an improvement in economic activity in February 2024. However, the inflation outlook presents mixed signals; while the mid-month core inflation for April is expected to dip, the headline Consumer Price Index (CPI) is anticipated to remain unchanged. These indicators influence the currency’s strength by affecting investor sentiment and monetary policy expectations.
USD/MXN: US Economic Deceleration Shifts Investor Focus
In contrast to Mexico’s economic positivity, the United States has exhibited signs of a slowing economy, as reported by the latest S&P Global report on business activity. The decline in business activity puts downward pressure on the US dollar. Consequently, investors search for stronger economies to invest in. This shift enhances the relative value of the Mexican peso against the dollar.
USD/MXN: Mexican Interest Rates Steady at 11.00%
The Bank of Mexico maintains its 11.00% rate, suggesting stability in May and a possible rate cut in June. This anticipation aligns with the bank’s end-of-year rate forecast of 10.00%, revised upwards from a previous forecast of 9.63%. Therefore, these monetary policy expectations are crucial for traders and investors, as interest rate decisions directly impact currency valuations.
Rate Expectations Stable at 10.00% Amid Market Speculation.
Polls, such as the one conducted by Citibanamex, align with the central bank’s projections, expecting interest rates to remain unchanged in May and foreseeing a rate cut in June with an end-of-year rate estimate remaining steady at 10.00%. Consensus views shape market expectations, influencing short-term trading strategies and long-term investment decisions for the USD/MXN currency pair.
