Dollar bounces higher from 6-day lows against Mexican Peso after Mexico GDP and US labor costs.

• USD/MXN falls to six-day lows of 16.96 before the American session open but rebounds afterwards to a daily high of 17.07.
• The Dollar rebounds strongly after the rise in the US labor cost index to 1.2% in the first quarter, exceeding the 1% estimate.
• Mexico's preliminary GDP grew 1.6% annually in the first quarter of 2024, down from 2.5% previously.

USD/MXN began Tuesday regaining ground around 17.05, but subsequently eased to fall below the 17.00 area, hitting a six-day low of 16.96 following Mexican GDP data. The pair rebounded sharply higher soon after to a daily high of 17.07, boosted by a bigger-than-expected rise in US labor costs.

The Dollar regains strength with the increase in US labor costs.

The Dollar Index (DXY) has risen sharply in recent minutes, coinciding with the publication of US labor cost data. The DXY has shot up to daily highs of 106.05 and is now moving around the 106.00 zone.

He US labor cost index for the first quarter of the year has shown an increase of 1.2%above the previous 0.9% and the expected 1%, which has boosted the Dollar.

Traders now await Chicago PMI data for April, which is expected to rise to 44.9 from 41.4 in March, and consumer confidence from the Conference Board. All this without losing sight of the Federal Reserve's monetary policy decision that will take place tomorrow, Wednesday at 6:00 p.m. GMT. The focus will be on the statement and the subsequent appearance of its president Jerome Powell, since a hard-line tone in his speech could give new impetus to the Dollar.

The Mexican economy grows 1.6% annually during the first quarter of the year, its most moderate increase since 2021

Mexico's Gross Domestic Product (GDP) has shown a growth of 1.6% in the preliminary annual reading for the first quarter of the year, as reported by the National Institute of Statistics and Geography (INEGI). The increase has been less than the 2.5% in the last quarter of 2023. In fact, this is the lowest growth seen in the Mexican economy since the fourth quarter of 2021.

Quarterly GDP has grown by a preliminary 0.2% between January and March 2024, exceeding the 0.1% increase in the period from October to December 2023.

USD/MXN Price Levels

With the US Dollar currently trading against the Mexican Peso around 17.06, gaining 0.36% daily, the next target if it continues to rise is at 17.39/17.40, where it expects last week's high reached immediately after the publication of the US GDP.

On the downside, initial support awaits at 16.90, last week's low reached on April 24. Below, a break of the intermediate support zone around 16.55/16.50 could lead towards 16.26, the 2024 bottom and lowest level since 2015.