The price of the Dollar plummets to new lows in more than eight years against the Mexican Peso

  • USD/MXN falls to lows since November 2015 at 16.44.
  • The Minutes of the Banxico meeting support the Mexican Peso.
  • The Dollar rises against the rest of the main currencies after the good figures from US Non-Farm Payrolls.

The USD/MXN falls sharply on the last day of the first week of April. The pair has fallen from Friday's opening daily high at 16.60 to a new low since November 2015 at 16.44. At the time of writing, the pair is trading around this bottom, losing 0.83% daily.

The Mexican Peso benefits from Banxico Minutes that are committed to maintaining the restrictive stance on interest rates

The Banxico minutes revealed a reluctance on the part of policymakers to adopt a cycle of flexibility, including a commitment to lower interest rates in the future, due to the persistence of inflation affected above all by high prices in the services sector. The Minutes confirm that risks to the trajectory of inflation remain high, so rates should remain high and decisions will depend on upcoming data.

The high prices of a barrel of oil, with the barrel of WTI and Brent at highest levels since October, also favor the Mexican peso, since Mexico is one of the main exporters of crude oil.

The good employment data from the US boosts the Dollar against the main currencies

The dollar has gained strength against its main rivals, but not against the currencies of emerging economies such as Mexico or Colombia. The Dollar Index (DXY) has risen strongly to two-day highs at 104.69 following the data United States Nonfarm Payrolls (NFP)which has revealed that 303,000 jobs were generated in March, well above the 200,000 expected and the 270,000 in February.

CME Group's FedWatch tool has slightly raised expectations for a first interest rate cut by the Fed in June, putting them at 56.1% compared to 55.5% yesterday.

USD/MXN Price Levels

With the USD/MXN immersed in a strong bearish channel in the short, medium and long term, initial support appears in the 16.35 zone, where the lows of October and November 2015 await. A break of this region could take the pair to the psychological zone of 16.00, also bottom of July 31, 2015.

To the upside, it is necessary to overcome this week's ceiling at 16.67 to be able to hope for an advance towards 16.77, last week's maximum. Above it awaits the March 19 top at 16.94 and, subsequently, the key level of 17.00.

USD/MXN daily chart

Source: Fx Street

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