The price of the Dollar returns above 18.00 against the Mexican Peso after falling to two-week lows near 17.90 before the Fed

• USD/MXN fell to two-week lows of 17.92 in the European session.
• The price of the Dollar shoots to two-day highs near 106.80.
• Markets are cautious ahead of important data due on Wednesday.

USD/MXN began Tuesday’s trading session hitting a daily high of 18.11, but lost ground during the European morning before falling to a two-week low of 17.92. Following the opening of Wall Street, the pair has recovered ground, returning above the $18.00 area.

Dollar price experiences strong recovery ahead of Fed and US ISM and ADP data

He Dollar Index (DXY) has staged a strong rally this Tuesday. After hitting a one-week low of 105.90 at the beginning of the European session, the greenback has begun to gain ground, shooting up in the last few minutes to 106.78, a new two-day high.

Risk aversion is returning to the markets with the escalation of the conflict between Israel and Hamas. In the last few hours there has been a bombing in a refugee camp in northern Gaza that has caused dozens of deaths. On the other hand, Antony Blinken, US Secretary of State, has rejected a ceasefire in the region in a hearing in the US Senate.

With the conflict as a backdrop, operators are very attentive to what happens this Wednesday, November 1. First of all, the report will be published ADP private employment, which foresees the creation of 150,000 jobs in October in the US, up from 89,000 in September. Later, the ISM manufacturing for the same month will be released, expecting an increase to 49 points from the previous 47.6, which would keep the sector in contraction territory. Finally, the Fed will announce its monetary policy decision, with the market widely expecting interest rates to remain unchanged at 5.5%. Any surprise or significant deviation in these forecasts could cause strong movements in the price of the Dollar.

Read – Federal Reserve Preview: Powell is set to raise the Dollar, leaving the door open to more rate hikes

Mexico, for its part, registered economic growth of 0.9% in the third quarter of the year, according to the estimated GDP reading published by the National Institute of Statistics and Geography (INEGI). This growth would be slightly above the 0.8% estimated by the market. On a year-on-year basis, the increase was 3.3%.

USD/MXN Price Levels

With the USD/MXN trading at the time of writing above 18.07, gaining 0.15% daily, the first resistance if it continues to rise is at 18.14, the high of October 30. Higher up it expects 18.42, the top of October 26, and the zone between 18.46/18.49, which contains the October highs recorded on October 20 and 6, respectively.

On the downside, a fall in USD/MXN below today’s low at 17.92 could cause a decline towards 17.75, the weekly low of October 12. Further down, a support zone awaits around 17.37/17.34, where the October minimum recorded on day 2 and the bottom of September 29 is.