- The dollar remains firm in the face of falls in the equity markets.
- USD/MXN above 20.30, unable to break 20.45.
- Banxico is expected to announce a rise of 50 basis points in a few hours.
The USD/MXN is rising but modestly on Thursday before the decision of the Bank of Mexico was known and in a complicated context of the financial markets due to the dominance of pessimism about the future of the world economy.
The pair reached up to 20.47 hours ago, driven by a general rise in the dollar. After reaching a one-week high, USD/MXN lost momentum and fell back to the current level of 20.34.
On Wall Street, the main indices are in the red but far from their lows. This loss cut helped the Mexican peso in the last few hours. US data (jobless claims and wholesale inflation) did not have much of an impact as the focus is on stock indices.
Safe-haven demand pushed up Treasuries and led to a big drop in yields that may have capped the dollar’s strength at some point against emerging market currencies.
In a few hours, the Bank of Mexico will announce the decision of the Governing Board. A rise in the reference interest rate from 6.50% to 7.00% is expected. This week it was known that in April inflation rose to 7.68% from 7.45% and that the core went from 6.78% to 7.22%.
technical landscape
In the very short term, USD/MXN remains sideways with upside risks. Of all the barrier of 20.45 is still intact and just after a break with confirmation would leave the dollar free for more rises. The next resistances are seen at 20.50 and 20.70. In the opposite direction, if it settles below 20.25, the Mexican peso would be positioned for more rises.
Technical levels
Source: Fx Street
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