The Dollar falls to three-day lows against the Mexican Peso after the Fed announcement

• USD/MXN has fallen to three-day lows of 16.67 following the Fed announcement.
• The dollar weakens as the Fed's projections maintain its forecast of three rate cuts until the end of 2024.
• The Fed keeps its interest rates unchanged at 5.5% for the fifth consecutive meeting.

The USD/MXN has fallen sharply following the publication of the Fed's decision and its projections or dot chart. The pair has fallen from the 16.74 area to 16.67, a new three-day low.

The Dollar is disappointed with the Fed's projections

The United States Federal Reserve has decided to keep interest rates unchanged at its March meeting, leaving them at 5.5% for the fifth consecutive meeting.

He The US Federal Reserve's dot plot released at the March meeting has kept the outlook for rate cuts by the end of 2024 unchanged at 4.6%, as projected in December. Therefore, the entity continues to expect three cuts until the end of the year, as predicted in December.

The Dollar Index (DXY) has weakened on these projections, as it expected rates to be reduced by 50 basis points instead of 75. The greenback has fallen after the statement to 103.64, a daily low, although it is now moving above 103.80 , practically flat on the day.

Traders are now awaiting Fed Chairman Jerome Powell's press conference, as he could continue to move the pair if he gives clues about the date of the first rate cut.

On the other hand, the market awaits the decision on Banxico's interest rates on Thursday, which is expected to reduce its rates to 11% from the current 11.25%. Previously, Mexico will publish its January retail sales. Both events could cause high volatility in the pair.

USD/MXN Price Levels

With the Dollar trading above 16.71 Mexican pesos at the time of writing, losing 0.53% daily, the next downward objective is 16.64, the minimum of 2024 reached on March 14. Below I would expect strong support at 16.62, the July 2023 floor and the lowest level recorded since 2015.

To the upside, the Dollar still has important resistance at 17.00. A break above this level could take USD/MXN to 17.15, the ceiling of February 22 and 23.