The price of the Dollar falls to an 8 and a half year low against the Mexican Peso near 16.30

• USD/MXN falls to 16.34, lowest level since October 2015.
• The Dollar falls to the day's lows at 104.16.
• The CPI figures for Mexico and the US will be published this week, which could cause great volatility in the USD/MXN.

The USD/MXN hits new lows since 2015 for the third consecutive day. The pair opened the second week of April hitting an intraday high at 16.49, but after the American opening it fell to an eight-and-a-half-year low at 16.34.

Inflation in Mexico and the US will determine the week of the USD/MXN

Inflation data from Mexico and the United States will set the pair's direction this week. The Consumer Price Index (CPI) of Mexico will be published tomorrow, Tuesday, expecting a monthly increase of 0.36% compared to the 0.09% seen in February. For the annual reading, a rise to 4.5% is expected from the previous 4.4%. If the increase is confirmed, or exceeds forecasts, the Mexican peso could continue to strengthen, since Banxico could take longer before cutting its interest rates again, as the governor of the Central Bank of Mexico already anticipated a few days ago.

For its part, US to release inflation figures on Wednesday. The headline CPI is forecast to rise to 3.4% annually from 3.2% previously, due in part to rising oil prices. The focus will also be on the core CPI, which excludes volatile items such as food and energy, which is expected to reduce to 3.7% annually from 3.8% previously. A surprise in the figures could move the Dollar. If inflation is higher than expected, the Fed could rule out a rate cut in June, giving strength to the dollar.

The tool CME Group's FedWatch is lowering the odds of a first cut by the Federal Reserve in June, placing them today at 51.2%, its lowest level in recent weeks.

The Dollar Index (DXY) has fallen today, Monday, to a daily low of 104.16 points after starting the day around 104.43.

USD/MXN Price Levels

With the US Dollar trading above 16.35 against the Colombian Peso, losing 0.59% on the day, the trend is clearly bearish in the short, medium and long term. The first support level now appears at 16.32, October 2015 low. A break below this level could target 16.16, July 29 bottom, before heading towards the psychological region of 16.00.

To the upside, main resistance awaits at last week's high at 16.67. Only a recovery above that region could suggest firmer momentum towards 16.77, the highest level of the last week of March.