- The Mexican peso loses impulse despite the optimistic Aprilist sales report.
- The vote of the Fiscal Law of the House of Representatives remains in the focus, can the Usd bundles deter?
- The USD/MXN rises above the resistance of the previous trend line, heading around 19,400.
The Mexican peso (MXN) and the US dollar (USD) have been preparing for a crucial winds against economics and fundamental, which have offered a vision of the current and projected growth prospects for both economies.
With the publication of Mexico’s retail sales data at 12:30 GMT exceeding both forecasts at the monthly and annual levels, the developments from the United States have eclipsed the recent report, highlighting the importance of the dollar in the current economic environment.
As the Mexican weight continues to quote below a key psychological level of 19,400, a break above the level of support converted into anterior resistance in 19.30 has provided an additional layer of resistance, helping to guide the action of the price for emerging market currency (EM), potentially triggering volatility if the data deviate from expectations.
Meanwhile, the projected trajectory of the dollar is still in the focus while investors expect more comments from the US Federal Reserve officials (Fed) and the very anticipated vote of the House of Representatives about the “One Big Beautiful Bill Act” by President Donald Trump.
Market participants are closely evaluating the short and long -term implications of the proposed fiscal legislation, which could significantly influence the perspectives of fiscal policy and the feeling of investors to the US dollar.
Daily summary of the Mexican peso: the USD/mxn rises with hopes of a stronger dollar
- Mexican retail sales increased 0.5% in March compared to the 0.2% increase in February, with interannual figures exceeding forecasts, standing at 4.3%, well above the 2.2% expected.
- As the US dollar promotes the market management in general, changes in the feeling of the USD, driven by US fiscal policy, economic data or Fed signals tend to issue the short -term trajectory of the USD/MXN, with the weight reacting accordingly.
- The “One Big Beautiful Bill” of President Trump aims to extend the 2017 tax and job cuts law and introduce new tax relief measures.
- The suggested amendments would include state and local tax deductions (PALT), which is expected to triple $ 10,000 to $ 30,000 for married couples in the US, reducing the amount of income that the Government receives per fiscal year and exerting additional pressure on the fiscal budget.
- To compensate for the cost of extended tax cuts, President Trump has proposed to reduce spending on programs associated with Medicaid, food coupons and green energy subsidies, while redistributing funds towards defense and application of immigration.
- On the US side, S&P global will publish the preliminary index of purchasing managers (PMIS) for May and the sales data of existing housing for April on Thursday to obtain new economic signals.
Technical analysis of the Mexican weight: the USD/MXN operates with caution with the resistance of the intact trend line
The USD/MXN fell to its lowest level since October on Tuesday, breaking the previous psychological support level, which has now become resistance in 19.30.
Currently, prices have risen above the previous descending trend line established from the April fall, providing an imminent support barrier in 19.28.
The indicator of the Relative Force Index (RSI), which is recovering slightly to 36.97, reflects a slight decrease in the bearish impulse. Since the 30th mark is considered a potentially overene territory, the bearish trend remains intact, with the next key support level in the round number of 19.20.
USD/MXN daily graphics
The indicator of the Relative Force Index (RSI), which is recovering slightly to 36.97, reflects a slight decrease in the bearish impulse. Since the 30th mark is considered a potentially overene territory, the bearish trend remains intact, with the next key support level in the round number of 19.20.
On the other hand, if the USD strength resurfaces and prices rise above the descending trend line, the USD/MXN could see a new test of the April minimum about 19.47, leading to the simple mobile average (SMA) from 20 days to 19.53.
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
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.
