- The USD/MXN wins 0.36% on the last day of the week, currently quoting about 20.56.
- The dollar index (DXY) rebounds 0.29% daily, reaching maximums not seen since February 13 in 107.66.
- Donald Trump confirmed the imposition of 25% tariffs on Mexico and Canada from March 4.
- The Personal Consumption Expenditure Index fell to 2.5% in January, in line with market estimates.
The USD/MXN established a minimum of the day at 20.37, finding buyers who promoted parity to a maximum of February 13 in 20.64. At the moment, the USD/MXN operates in 20.55, winning 0.36% today.
The Mexican weight loses ground after the publication of the United States PCE
Based on information published by the United States Economic Analysis Office, the Personal Consumption Expenditure Price Index (PCE) dropped to 2.5% in January, compared to 2.6% reached in December. At the same time, the underlying PCE increased by 2.6% per year in the same period, lowering 2.9% registered the previous month. On the other hand, the dollar index (DXY) rises 0.29% in the day, signing its third consecutive session with profits, visiting maximums of more than two weeks not seen since February 13 in 107.66.
Another chapter of Donald Trump’s tariff rhetoric appeared yesterday, confirming the imposition of 25% tariffs on Canada already Mexico from March 4. This resolution is presented in the midst of tense negotiations between officials, in response to what Trump has called “the entry of unacceptable narcotic levels to the country.”
After this news, the Mexican weight extends its losses today, reaching minimums of more than a week, while the USD/MXN rises 0.36% on the last day of the week, spinning two consecutive sessions upwards, reaching maximums not seen from February 13 in 20.64.
USD/MXN Price levels
The USD/MXN established a short -term support given by the minimum of February 18 in 20.20. The next key support level is observed in 20.13, minimum of January 24. Up. The key resistance is at the Pivote point of February 3 at 21.29.
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.
