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USD/MXN at new lows below 18.50, despite USD strength

  • US Pending Home Sales improved but investors focus on Friday’s core CPI numbers.
  • Banxico’s monetary policy decision is looming, and analysts expect a rate hike of 25 basis points.
  • USD/MXN Price Analysis: A further drop is expected, but Banxico’s decision could drive a rise.

He USD/MXN continues its free fall for the week, down 1.45% since Monday, posting five days of straight losses. The improvement in sentiment and the strength of the dollar have not stopped the appreciation of the Mexican currency. At the time of writing, the USD/MXN pair is trading at 18.1060, down 0.69% on the day.

MXN at the mercy of Banxico’s political decision

Risk appetite underpinned the Mexican peso (MXN), which continues to drag the USD/MXN rate further below the psychological barrier of 18.50, with a view to testing 18.00. Investors’ risk appetite improved on the news that Alibaba will split into six business groups seeking Initial Public Offerings (IPOs). Therefore, Wall Street shows an optimistic sentiment after a “short-lived” banking crisis.

The US economic calendar offered the figures for pending home sales for February grew 0.8% mom and beat estimates for a 0.3% plunge, although on a year-over-year basis, they were down 21.1%, less than the slump of the 29.4% expected.

Market participants ignored the US data and focused on the US Federal Reserve’s (Fed) preferred inflation gauge, Personal Consumption Spending Core (PCE) for February, estimated at 0.4 % MoM and 4.7% YoY.

In addition, Thursday’s agenda will be packed, with the initial claims for unemployment benefits for the last week and the Gross Domestic Product (GDP) for the fourth quarter.

Meanwhile, US Treasury yields retreat, with 2-year and 10-year yields each at 4.05% and 3.56%, respectively. The Dollar rises 0.27%, as shown by the Dollar Index, which stands at 102.704.

In Mexico, the Bank of Mexico (Banxico) will announce its decision on interest rates on Thursday. Analysts forecast a rate hike of 25 basis points by Banxico. Expectations revolve around a possible pause in the cycle of increases, which, although it favors the Mexican peso (MXN) due to its interest rate differential, could trigger some profit taking. Therefore, the USD/MXN could continue to rise.

USD/MXN Technical Analysis

USD/MXN Daily chart

On the daily chart, the USD/MXN pair is showing a bearish bias, with eyes set on a retest of last year’s lows at 17.8968. However, the USD/MXN pair needs to clear some hurdles on its way south, such as 18.00, followed by the March 7 low at 17.9664, before challenging the yearly low. If that price level is broken, the next support would be the July 2017 low at 17.4498.

Conversely, the first resistance for the USD/MXN would be the 20-day EMA at 18.4607. But oscillators remaining in bearish territory suggest that the path of least resistance is to the downside.


Last price today 18.1014
Today Change Daily -0.1353
today’s daily change -0.74
today’s daily opening 18.2367
daily SMA20 18.4428
daily SMA50 18.5818
daily SMA100 18.9929
daily SMA200 19.5605
previous daily high 18,359
previous daily low 18.2105
Previous Weekly High 19.2324
previous weekly low 18.3797
Previous Monthly High 19.2901
Previous monthly minimum 18.2954
Fibonacci daily 38.2 18.2672
Fibonacci 61.8% daily 18.3023
Daily Pivot Point S1 18.1785
Daily Pivot Point S2 18.1202
Daily Pivot Point S3 18.03
Daily Pivot Point R1 18,327
Daily Pivot Point R2 18.4172
Daily Pivot Point R3 18.4754

Source: Fx Street

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