- The Mexican peso remains firm against the dollar, marking a new maximum so far this year.
- The US markets remain closed by the day of the fallen, with low liquidity expected throughout the day.
- The USD/MXN faces renewed pressure, testing 19.20 while the attention focuses on the publication of the US PCE on Friday.
The Mexican weight (MXN) is experiencing a constant appreciation against the US dollar (USD) on Monday, reflecting persistent uncertainty in the economic perspectives of the United States (USA) amid concerns about the tariff threats of US President Donald Trump and the country’s fiscal perspective.
With the US markets closed for the day of the fallen on Monday, the Mexican weight remains resistant, with the USD/MXN torque contributing around 19.19, with a fall of 0.33%, at the time of writing this article.
As the participants keep an eye on the yields of the US Treasury bonds and the comments of US policies responsible, they must be aware of limited liquidity in the US market due to the festive weekend.
In this week’s economic agenda, the destination of the USD/MXN will probably continue at the mercy of the dollar and the perspectives provided by the minutes of the Fed meeting on Wednesday.
Market participants are particularly focused on the publication of the Fed’s favorite inflation measure, the U.S. U.S. underlying expense data for April, as well as the consumer’s feeling data of the University of Michigan, which are scheduled for Friday.
These data points are crucial to understand the trends of inflation and feeling of the consumer, and to evaluate how US citizens feel about the current economic situation, both important factors that can influence expectations about when the Federal Reserve (Fed) could consider cutting interest rates.
Daily summary of the Mexican peso: the USD/MXN faces pressure due to the renewed weakness of the US dollar
- The reduction of the US credit rating, the increase in the expectations of higher US debt levels and a massive sale in the bond market have put the resilience of the USD under significant scrutiny.
- The USD struggles to gain ground while investors digest the decision of US President Donald Trump to extend EU tariffs until July 9. Monday’s announcement encouraged risk markets, since operators see it as an opportunity for negotiations between the two significant economies.
- On Friday, Trump had threatened to impose 50% tariffs on imports from the European Union and 25% to Apple and Samsung smartphones, shaking the markets.
- The persistent tariff threats of President Trump aimed at international counterparts are undermining the confidence of investors, thus challenging the status of the USD as the preferred reserve currency.
- On Tuesday, the US consumer confidence data will be published, who measure the opinions of Americans about the economy and finance.
- The Agenda on Wednesday will see the publication of the minutes of the Federal Committee of the Open Market (FOMC) of May, offering perspectives on discussions on interest rates, together with public statements of members of the Fed that provide additional context for future monetary policy.
Technical analysis of the Mexican peso: the USD/MXN presses the support with the minimum of October in focus
The USD/MXN remains caught in a firm bearish trend, reaching a new minimum so far this year just below 19.20 at the time of writing this article.
The price action continues to float below the simple mobile socks (SMA) of 10 and 20 days, which act as dynamic resistances in 19.34 and 19.47, respectively.
Momentum indicators are still weak, with the relative force index (RSI) parked at 35.79, which suggests that, although there is bassist momentum, the market is not yet in overall territory.
With the downward pressure increasing, the attention now moves to the minimum of October in 19.11, which serves as the following important support.
A sustained rupture below this level could open the door to deeper falls around 19.00, while any rebound would first need to recover 19.47 to change the feeling in the short term.
USD/MXN daily graphics
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.
