USD/MXN Surges to 17.04, Past Key Levels

USD/MXN Surges to 17.04, Past Key Levels

Key Points:

  • USD/MXN surged, breaking key resistance and hitting 17.04.
  • Fed’s Powell hinted at a strong US economy, pressuring Peso.
  • Mexico’s fiscal adjustments aim to halve the deficit by 2025.
  • Mixed US economic data; pivotal retail sales data due from Mexico.

The USD/MXN currency pair has seen notable movements recently, breaking key resistance levels and touching a high of 17.04. After beginning the day at a low of 16.68, the pair surged past the 50-day moving average (DMA) at 16.81 and the crucial 100-DMA at 17.03. This breakout indicates a potential shift in momentum, suggesting an upward trajectory towards the 200-DMA at 17.16 and possibly higher to the January 17 high of 17.38 and the significant psychological level of 17.50.

Fed’s Powell Drives USD/MXN; Mexico’s GDP Cut to 2.4%

Recent comments from Federal Reserve Chair Jerome Powell have significantly impacted currency dynamics. Powell’s remarks on the robust performance of the US economy have fueled a rise in the USD against the Mexican Peso. Additionally, he noted a lack of progress on inflation expectations. The International Monetary Fund (IMF) has revised its expectations for Mexico, lowering the 2024 GDP forecast from 2.7% to 2.4%. Consequently, the 2025 projection has been reduced from 1.5% to 1.4%, further complicating the challenges faced by the Peso.

Mexico Slashes Fiscal Deficit Goal to 2.5% of GDP

Mexico’s Ministry of Finance has announced a major adjustment in its fiscal policies, expecting to reduce the fiscal deficit from 5% to 2.5% of GDP. Moreover, the Pre-General Policy Criteria Economic document for 2025 details a significant reduction of 833.6 billion Pesos in spending. This tightening could impact the country’s economic stability and growth long-term, influencing investor sentiment towards the Peso.

US Mixed Data; Mexico Awaits Key Retail Sales

Recent economic data has shown mixed results in the United States, with housing metrics missing estimates and industrial production remaining steady. On the other hand, Mexico is anticipating the release of March retail sales data on April 19, 2024. This release will be crucial for gauging consumer confidence and spending within the country, factors that are essential for economic momentum.

Global Unrest Bolsters USD/MXN; Investor Sentiment Shifts

Geopolitical tensions, particularly in the Middle East, have escalated recently, contributing to a global shift towards risk aversion. This change in investor sentiment has generally benefitted the USD as a safe-haven currency, further supporting its strength against the Mexican Peso. Geopolitical factors critically shape short-term and long-term currency valuations, and investors will continue to monitor them closely.

The USD/MXN pair’s journey through resistance levels and key economic indicators presents a complex picture of the financial landscape. Policy decisions, economic data, and global events influence this insight.