- The dollar tries to regain strength in the market due to the fall in equity markets.
- Inflation continues above 7% in Mexico, data from the US is coming.
- USD/MXN continues to point to April lows.
USD/MXN closed flat on Monday, having rebounded after hitting fresh one-month lows at 19.76. On Tuesday the pair rose to 19.94, but then changed direction and is trading at 19.79, the daily low.
The bias remains negative for the USD/MXN, close to the April floor around 19.72. A break below 19.70 would leave the MXN on track for more gains, with a possible target of 19.50. If this level cannot be reached in the short term, a bullish rebound would be expected. If confirmed above 19.85, the peso would lose momentum. Much higher, at 20.15, is the 20-day moving average, which, if broken, would negate the bearish bias.
Mexico: annual inflation at 7.58%
The inflation data for the middle of the month of May showed a respite in the annual index that slowed to 7.58%, after registering a drop of 0.6% compared to the last fortnight of April. The annual rate remains well above Banxico’s target, which is expected to continue raising the benchmark interest rate, not only to ease inflation but as a response to the increase being carried out by the Federal Reserve.
On Wednesday in Mexico, the growth data for the first quarter and the economic activity data for March will be published. In the US, the preliminary S&P Global PMI data for May will be released in minutes. On Wednesday, the minutes of the last meeting of the Federal Reserve.
Technical levels
Source: Fx Street
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