- USD/MXN with slight bearish bias, and limited weakness above 20.40.
- Mexican peso loses strength on Wednesday, far from the best.
- Markets awaiting the decision of the Federal Reserve.
USD/MXN is rising modestly on Wednesday ahead of key events and having managed to get back above 20.40. The dollar shows no direction, while the Mexican peso is far from the best performers.
Hours ago USD/MXN hit a one-week low at 20.38, but then bounced back above important short-term support at 20.40 and is approaching 20.50 after Wall Street opens. A close below will expose the next one at 20.30.
To the upside, the dollar would recover strongly to return above the 20-day moving average that is passing through 20.51. Then at 20.70 is the critical resistance which if broken would enable further advances.
The spotlight on the Fed
Tuesday andl International Monetary Fund improved the growth prospects for Mexico, going from 2.0% to 2.4%. While at the same time it reduced those of the world from 3.6% to 3.2%.
Wednesday the dollar recovered positions in the market after learning of an unexpected rise in orders for durable goods in June. The market focus is still on what the Federal Reserve will do.
The market expects the Fed to raise the interest rate by 75 basis points. If so, the impact could be limited, but the focus will be on future signals and there is also the possibility of a surprise with a rise of 100 or 50 points.
What do the fed It will also be key to the future of Banco de México. In addition to trying to control inflation, Mexican officials have a goal of maintaining a rate differential with the US central bank.
After the Fed, on Thursday in the US the growth figures for the second quarter will be published, which will also receive great attention, since a contraction would put the country in recession. Fed officials may know these figures by the end of the two-day meeting today.
Technical levels
Source: Fx Street
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