After hitting one-month highs last Monday at $19.29, the USD/MXN has been losing ground, losing close to 45 cents in less than 48 hours until reaching three day minimums on the European morning of this Wednesday in 18.84. The pair is moving in a narrow range of just 5 pips, between the mentioned low and $18.89, the daily high.
The dollar is weakening in the last hours due to the increase in risk appetite, which is leading to the DXY index to retest the two-day bottom at 102.99, which was already reached yesterday in the downward bounce that followed Powell’s remarks (minutes before the index rebounded).
The president of the Federal Reserve was less aggressive, although he pointed out that the strength of the labor market could make it difficult for inflation to fall, thus reiterating that interest rate hikes will probably continue.
USD/MXN traders are trading today attentive to market sentiment, with a focus on speeches by different members of the fed who will speak at the US session, including those of John C. Williams, president of the New York Fed, and Christopher Waller, member of the FOMC Board.
In any case, there may be a cautious atmosphere about the pair before tomorrow, Thursday, when Mexico will publish its inflation figures for January and will reveal its monetary policy decision. Banxico is expected to increase its interest rates by 25 basis points to 10.75%, a level that would mark a historical maximum since the country began its current monetary policy in 2008.
USD/MXN Levels
With the pair trading above 18.86 at time of writing, shedding 0.12% on the day, the first support appears at $18.64, minimum of February 3. A drop below could lead to $18.50, floor of February 2 and a minimum of four years. The breakdown of this region could cause significant losses towards 17.93floor of April 2018, and $17.44, minimum of the year 2017.
An upside momentum would meet strong resistance at yesterday’s high of 19.29. Higher up, the main barrier will be at 19.53, 2023 high reached on January 3. The 19.90/91 area, where the December 2022 highs are, could act as a strong limit to further advances.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
