The Dollar settles around 17.00 against the Mexican Peso after the US CPI.

• The USD/MXN oscillates after the US inflation data between 17.06 and 16.96.
• The dollar shoots up on market expectations of a delay in the Fed's rate cuts.
• Inflation in the United States surprises with higher than expected figures.

USD/MXN has oscillated following the unexpected US CPI data. The momentum of the Dollar has initially taken it to 17.06, a six-day high, but it has subsequently lost all the ground gained, falling to 16.96. Currently, the pair is trading above 17.01, gaining 0.17% daily.

The Dollar strengthens due to the persistence of inflation

He Dollar Index (DXY) has risen strongly after the inflation data from the United States, which has been higher than expected. The USD, as measured by its DXY index, has soared to 102.76, its highest level in six days. At the time of writing, the greenback is trading around 102.70, with gains of 0.34% on the day.

The US Consumer Price Index for the month of December has surprised with a rise to 3.4% from 3.1% in November, worsening the increase to the 3.2% estimated by the market. On a monthly basis, inflation has increased by 0.3%, also exceeding the previous 0.1% and the estimated 0.2%.

The core CPI, which excludes volatile elements such as energy and food, has stood at 3.9% annually, one tenth below the previous 4%. The figure disappoints consensus expectations, since a reduction to 3.8% was expected. Monthly, core inflation has maintained its growth at 0.3%, as expected.

The United States has also published its weekly jobless claims figures, this time beating expectations. Claims have fallen to 202,000 in the week of January 5 from the previous 203,000, improving on the 210,000 expected by consensus.

The Dollar has reacted upwards to the data in anticipation that the Federal Reserve choose to delay its interest rate cuts in 2024, due to persistent inflation. It remains to be seen how the market will digest this data in the coming hours, taking into account that this Friday the producer inflation figures for December, the IPP, will be published. The Producer Price Index is expected to grow 1.3% annually compared to 0.9% in November. The core PPI should moderate to 1.9% after growing 2% in the previous month, the consensus forecasts.

Besides, Mexico has published its industrial production figures today of November. The indicator has worsened expectations by growing 2.8% year-on-year, well below the expected 4.8%. This is the most moderate rise recorded by the indicator in seven months.

USD/MXN Price Levels

The first major resistance remains in the 17.10 zone, where is the ceiling from last week (January 3). If it exceeds this level, the next barrier appears at 17.30, high on December 18, and the next one at 17.56 (monthly high recorded on December 5).

On the downside, the first relevant support level awaits at 16.78, the bottom of the last four months tested on January 8. Below, USD/MXN can quickly slide to 16.69/16.70, lows of August 28 and 31, respectively. A break of this region will take towards 16.62, the annual low recorded on July 28 and the lowest level since December 2015.