The Dollar recovers ground from new lows of almost nine years against the Mexican Peso after Mexico's inflation

• USD/MXN fell to new near nine-year lows at 16.26 in European morning trading on Tuesday.
• The Dollar recovered some ground against the Mexican Peso after the publication of Mexico's inflation.
• Mexico's Consumer Price Index (CPI) rose 4.42% annually in March compared to the 4.5% expected.

The USD/MXN continued its downward trend for the fourth consecutive day in the first part of Tuesday. The pair fell in the European morning to 16.26, its lowest level since August 2015. After the publication of Mexico's March inflation, which was below expectations, the Dollar recovered ground against the Mexican Peso to reach a maximum daily at 4:35 p.m.

The price of the Dollar advances slightly against the Mexican Peso with the moderation of inflation in Mexico

Mexico's Consumer Price Index (CPI) has risen 0.29% in the monthly reading for March after increasing 0.09% in February, as published by the National Institute of Statistics and Geography (INEGI). The increase is less than the 0.36% expected by the market. On an annual basis, inflation has increased to 4.42% from the previous 4.40%, improving the consensus expectation, which placed it at 4.5%.

The core CPI (which excludes food and energy) has grown by 0.44% monthly, below the 0.49% of the previous month and the 0.51% expected by experts. The annual rate has stood at 4.55%.

The Dollar advanced thanks to the weakening of the Mexican Peso, caused because Lower-than-estimated inflation may cause Banxico to cut interest rates again at its next meeting of monetary policy.

The Dollar Index (DXY), on the other hand, continues to weaken in anticipation of US inflation that will be published tomorrow. The greenback is falling against strong currencies such as the Euro and the British Pound. The DXY has fallen today to 103.88, a nearly three-week low, and is currently moving below 104.00.

The focus turns to the United States CPI

The United States will publish its inflation data for the month of March this Wednesday. A higher-than-expected figure could strengthen the dollar and delay the Fed's first interest rate cut, while a considerable moderation could weaken the greenback against the Colombian peso. The market expects headline CPI to rise to 3.4% annually from 3.2% previously, while core inflation is expected to moderate to 3.7% from 3.8% in February.

USD/MXN Price Levels

With the Dollar trading at the time of writing about 16.33 against the Mexican Peso, gaining 0.09% daily, the trend remains strongly negative despite the slight rebound in recent hours.

The first support zone in case of seeing a new setback will be around 16.10/15, where the lows of August 2015 are. Below it awaits the strong psychological region of 16.00 before falling to 15.63, the July 2015 floor.

Moving north, any recovery requires exceeding last week's high at 16.67. A break above that region could suggest firmer momentum towards resistance 16.77, the highest level of the last week of March.