USD/MXN bounces tepidly after holding above 18.75

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  • Mexico: slowdown in the fourth quarter.
  • Important US data on Thursday, next week it will be the Fed’s turn.
  • USD/MXN maintains a bearish bias in general, but with current support at 18.75/18.80.

USD/MXN is rising slightly on Thursday after having managed to hold above the 18.75 zone. The pair is trading sideways ahead of important US data releases and with the Federal Reserve meeting on the radar.

Looking at data and the Fed; then to Banxico

The dollar marked lows in months against several currencies hours ago, but then recovered ground. Equity markets are modestly up, as are Treasury yields.

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The expectation on Thursday is in the US economic reports, among which the fourth quarter GDP stands out, which is expected to show an expansion at an annualized rate of 2.6%. In addition, the weekly report on jobless claims, new home sales, durable goods orders, foreign trade and the Kansas Fed manufacturing index will be released.

The data will serve to shape expectations for the meeting of the Federal Reserve. The decision will be known next Wednesday and a rise of 25 basis points is expected.

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In Mexico, on Wednesday a contraction in the November economic activity index of 0.45% was known, worse than expected; and an increase of 3.3% compared to a year ago, less than the 4.4% of the previous month. TD Securities analysts say this confirms that the economic slowdown began in the fourth quarter and according to them should extend into 2023. “We currently expect growth of 1% for 2023, due to weak manufacturing activity in the US and the delayed effects of Banxico’s monetary policy adjustment conditions”, they stated. On Thursday it was learned that the unemployment rate in Mexico remained at 3.0% in December

The next meeting of the Bank of Mexico It will be on February 9. For now, a new interest rate hike is expected, which might not be the last.

USD/MXN Technical Overview

The dominant trend in USD/MXN remains bearish. At the moment the 18.75/80 zone is being an important support that limits the losses. In case of falling below, the next target level is around 18.67. If the latter were to be drilled, this year’s minimum at 18.56 would be exposed.

If it cannot break 18.75 in the short term, an upward rebound would be expected, which could reach 18.90. Then the next resistance is at the critical zone of 19.00, which also contains the 20-day moving average. A close above would enable the dollar to rise further and go to test last week’s highs at 19.11.

technical levels


Today’s last price 18.8357
Today Daily Change 0.0512
Today Daily Change % 0.27
Today daily open 18.7845
Daily SMA20 19.0539
Daily SMA50 19,338
Daily SMA100 19.6166
Daily SMA200 19.8935
Previous Daily High 18.8538
Previous Daily Low 18.7672
Previous Weekly High 19.11
Previous Weekly Low 18.5663
Previous Monthly High 19.9181
Previous Monthly Low 19.1084
Daily Fibonacci 38.2% 18.8003
Daily Fibonacci 61.8% 18.8207
Daily Pivot Point S1 18.7499
Daily Pivot Point S2 18.7153
Daily Pivot Point S3 18.6634
Daily Pivot Point R1 18.8364
Daily Pivot Point R2 18.8883
Daily Pivot Point R3 18.9229

Source: Fx Street

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