The price of the Dollar rises to eight-day highs near 17.90 after Banxico’s status quo and Powell’s hawkish words

• USD/MXN rises to 8-day highs near 17.90.
• Jerome Powell warned in his appearance at the IMF that the Fed is not confident that it has reached a sufficiently restrictive stance
• The Bank of Mexico leaves its interest rates unchanged at 11.25% at the November meeting.

The USD/MXN has seen a strong rise this Thursday after the coincidence of two relevant events for the pair, Banxico’s monetary policy announcement and the appearance of the president of the Fed at a panel of the International Monetary Fund (IMF). The price of the Dollar against the Mexican Peso has skyrocketed to eight-day highs at 17.87 and trades at the time of writing around 17.83, gaining 1.63% on the day.

The price of the dollar regains strength thanks to Powell’s hawkish words

He Dollar Index (DXY) has risen immediately after the first statements by Jerome Powell, president of the Fed, were made known during his participation in a panel of the International Monetary Fund (IMF).

Powell has indicated that the members of the Federal Reserve expect that the process of sustainably reducing inflation to 2% will have a long haul, and he pointed out that they are not confident that they have achieved a sufficiently restrictive monetary policy stance. The Fed chairman concluded that “If it is appropriate to tighten monetary policy even further, we will not hesitate to do so“.

The dollar rose after these statements, reaching the zone 105.97, new six-day high. At this time, the DXY remains firm, trading above 105.96, gaining 0.40% daily.

Banxico leaves its rates unchanged and anticipates that they will remain at this level for some time

Banxico announced this Thursday that maintains its interest rates unchanged at 11.25%, as the market anticipated. This is the fifth consecutive meeting in which the Bank of Mexico does not change its rates.

In its statement, the entity acknowledged that inflation continues to decline but it is considered that the balance of risks with respect to the expected path for prices in the forecast horizon remains biased upward.

The Governing Board considers that, to achieve the orderly and sustained convergence of general inflation to the 3% target, it will be necessary to maintain the reference rate at its current level for some time.

In the American pre-opening, the National Institute of Statistics and Geography (INEGI) published the Consumer Price Index (CPI) of Mexico. The Inflation stood at 4.26% annually in October, below the 4.28% forecast and the previous 4.45%. This is the lowest level of inflation seen in the country since February 2021.

While waiting for the market to digest Powell’s comments and the announcement from the Mexican central bank, the focus tomorrow will be on Mexico’s industrial production data for the month of September, which is expected to grow 4.4% annually compared to 5.2% August, and in the preliminary consumer sentiment index from the University of Michigan, which is expected to decrease one tenth to 63.7 points.

USD/MXN Price Levels

If it continues to rise, the first resistance appears in the psychological region of 18.00. A break of this level could take the USD/MXN to the barrier located around 18.15, the high area of ​​last week (October 30). Further up, an important containment area awaits between 18.42/18.49, October’s highest levels.

To the downside, the pair will find a initial support at 17.45, minimum of November 7. A break lower will target 17.28, a six-and-a-half week low tested on November 3 after the NFP. Below, the region of 17.00/16.99 awaits, the psychological zone and the minimum of September 20, respectively.