- The Mexican peso extends its progress against the US dollar, marking a fourth consecutive day of profits.
- Commercial conversations between the US and China begin in London, increasing the demand for currency of emerging markets.
- The USD/MXN suffers its fourth day of losses while prices are directed around 19.00.
The Mexican peso (MXN) is strengthening against the US dollar (USD) for the fourth consecutive session on Monday, since the feeling of the market in general improves. The last impulse in the appetite for risk can be attributed to encouraging developments in commercial negotiations between the US and China, which have helped reduce global uncertainty.
At the time of writing, the USD/MXN is quoted at 19.03, its lowest level since August last year, with the price action addressing the level of psychological support of 19.00.
Daily summary of the Mexican peso: commercial conversations between the US and China support the pairs of currency of emerging markets
- US officials and China are gathering in London for two days of high -level commercial conversations aimed at relieving tensions and restoring dialogue between the two largest economies in the world.
- The main approach is in China’s rare land mineral exports and possible concessions on export controls related to US technology.
- Positive results could raise the feeling of risk and support the peso, while failed conversations could boost flows to the US dollar as a safe refuge.
- The US Non -Agricultural Payroll (NFP) report on Friday surprised upwards, with May labor data showing 139,000 new added jobs, exceeding the expectations of analysts of an increase of 130,000.
- This stronger figure than expected reinforced the resilience of the US economy and helped raise the US dollar. However, the relaxation of tensions between the US and China continued to support risk assets, adding to the weakness of the USD/MXN.
Technical analysis of the Mexican peso: the USD/MXN is directed around 19.00
After four consecutive days of losses, the USD/MXN exchange rate remains under pressure, trapped below the simple mobile average (SMA) of 20 days around 19.30.
This level acts as dynamic resistance, limiting any short -term recovery attempt. It is also a psychologically important price point, since round numbers like 19.30 tend to attract a heavy orders and institutional attention.
With the momentum still inclined downward, the inability to recover this level maintains the persecution short -term perspective.
That said, the torque is floating about 19.01, a key level that could determine the next directional movement. This support marks the fibonacci setback of 61.8% of the rally, which occurred from the minimum of July to the maximum of February.
If the USD/MXN can maintain this level, it could attract buyers in search of a rebound, especially since the relative force index (RSI) is 34, approaching the over -sales territory.
USD/MXN daily graphics
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.
