- The USD/MXN rises to eight days at 20.26.
- The US dollar is strengthened after the Fed statement.
- The US data published today improves expectations.
The USD/MXN opened on Thursday testing a minimum daily at 20.02, and gained traction with the progress of the day, favored by the recovery of the US dollar. The pair has reached eight days in 20.26 after the publication of several data from the United States that were better than expected.
At the time of writing, the USD/MXN is quoted over 20.17, winning 0.64% in what we have been working on.
The US dollar is recovered thanks to the Fed and several US data better than expected
The US dollar index (DXY) has been strengthened in the last hours, favored by US data, which were better than expected, and by the announcement of yesterday’s Fed, which showed that the entity is not in a hurry to start cutting the fees. The green ticket records its second consecutive day of profits, and reaches a maximum of two weeks in 104.13 recently.
The US unemployment requests from the United States published today rose to 223,000 last week since the previous 221,000, improving the expected 224,000. The manufacturing index of the Philadelphia Fed was moderated to 12.5 points in March from February 18.1, standing above the estimated 8.5. Finally, existing housing sales grew 4.2% in February after falling 4.7% in January.
The yesterday’s monetary policy meeting left several titles. First, the FOMC projections foresee that there are only two cuts of 25 basic points (PB) or one of 50 bp in the remainder of 2025. Secondly, the PCE inflation is expected to rise at the end of the year, and thirdly, Jerome Powell’s speech made it clear that the Fed is not in a hurry to cut the interest rates.
The CME Group Fedwatch tool rules out changes for today, and foresees only 14.8% probabilities of a type reduction in May, below yesterday’s expectation. In June, on the other hand, these options are located at 72.7%, above the projected in recent days.
The president of Mexico responds to the Fitch reduction ensuring that she has a plan
Fitch Ratings announced yesterday that he anticipates a recession for Mexico. The agency has reduced Mexico’s growth forecast by 2025, placing it at 0% from the 1.1% previously projected. By 2026, it is estimated that the country creates 0.8% compared to 1.7% of the previous estimate.
The Mexican president, Claudia Sheinbaum, responded by ensuring that her government has a plan and is working to strengthen the economy from below, promoting investments.
USD/MXN Price levels
Upwards, the main resistance zone awaits in 20.38/20.40, mobile average of 100 periods in daily and maximum graph of March 11, respectively. Above, the torque could extend its ascent to 20.99/21.00, March maximum and psychological level.
Down, the 19.90 area acts as a support after marking the minimum of the USD/MXN on Tuesday and Wednesday. A break of this level would find opposition a little lower in 19.84, land of 2025 registered on March 14.
Mexican weight FAQS
The Mexican weight (MXN) is the most commercialized currency among its Latin American peers. Its value is widely determined by the performance of the Mexican economy, the country’s central bank policy, the amount of foreign investment in the country and even remittance levels sent by Mexicans living abroad, particularly in the United States. Geopolitical trends can also affect MXN: for example, the Nearshoring process (or the decision of some companies to relocate the manufacturing capacity and supply chains closer to their countries of origin) is also considered a catalyst for the Mexican currency, since the country is considered a key manufacturing center in the American continent. Another catalyst for MXN is oil prices, since Mexico is a key exporter of the raw material.
The main objective of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in or close to its 3%target, the midpoint of a tolerance band between 2%and 4%). To do this, the bank establishes an adequate level of interest rates. When inflation is too high, Banxico will try to control it by raising interest rates, which makes the indebtedness of homes and companies more cooling, thus cooling the demand and the economy in general. The highest interest rates are generally positive for Mexican weight (MXN), since they lead to higher yields, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the MXN.
The publication of macroeconomic data is key to evaluating the state of the economy and can have an impact on the valuation of the Mexican weight (MXN). A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only attracts more foreign investment, but it can encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this fortress is accompanied by high inflation. However, if the economic data is weak, the MXN is likely to depreciate.
As an emerging market currency, the Mexican weight (MXN) tends to rise for periods of risk, or when investors perceive that the general market risks are low and, therefore, are eager to participate in investments that carry a higher risk. On the contrary, the MXN tends to weaken at times of market turbulence or economic uncertainty, since investors tend to sell higher risk assets and flee to the most stable safe shelters.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
