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USD/MXN holds around 17.05 amid stable Dollar ahead of US Manufacturing PMI

  • USD/MXN struggles to enter positive territory on Friday.
  • Mexico's unemployment rate rose to 2.9% year-on-year from 2.6% previously.
  • The Fed's first rate cut could be delayed due to recent US GDP and PCE numbers.

He USD/MXN recovers its intraday losses and remains stable near 17.05 during the early hours of the European session on Friday, trading in a tight range around the weekly low of 17.03 recorded on Thursday. The Mexican Peso (MXN) has gained ground against the US Dollar (USD), boosted by positive January labor market data released the previous day.

Mexico's unemployment rate rose to 2.9% year-on-year from 2.6% previouslyexceeding expectations of a 2.8% increase, but maintaining a relatively tight labor market. While the seasonally adjusted rate stood at 2.8% in January. On the other hand, the Bank of Mexico (Banxico) will publish the Fiscal Balance for January on Saturday. Banxico revised its economic growth projection for 2024 to 2.8%, while maintaining the projection at 1.5% for 2025.

Deputy Governors Jonathan Heath and Omar Mejía advocated for a gradual approach to rate adjustments, emphasizing the importance of maintaining higher rates over an extended period. In addition, Deputy Governor Irene Espinosa stressed the need for Banxico to consider both external and internal factors that affect inflation when making monetary policy decisions.

The US Dollar Index DXY remains near 104.10, with US Treasury yields improving to 4.63% for 2-year bonds and 4.25% for 10-year bonds in the time to write. However, Market expectations for the Federal Reserve's first rate cut have been dampened by the latest dataincluding the Gross Domestic Product (GDP) and the United States (US) Personal Consumption Expenditure (PCE) price index, which provide support to the US Dollar (USD).

According to the CME's FedWatch tool, the probability of rate cuts in March stands at 3.0%, while the probability of cuts in May and June is estimated at 23.1% and 52.2%, respectively. Investors are awaiting the US ISM Manufacturing PMI for February, which is scheduled for release on Friday.

USD/MXN technical levels

Overview
Latest price today 17.0565
Today's daily change 0.0087
Today's daily variation 0.05
Today daily opening 17.0478
Trends
SMA20 daily 17.0858
50 daily SMA 17.0682
SMA100 daily 17.3062
SMA200 Journal 17.2599
Levels
Previous daily high 17.1103
Previous daily low 17.0402
Previous weekly high 17.1574
Previous weekly low 16.9953
Previous Monthly High 17.2852
Previous monthly low 16.9953
Daily Fibonacci 38.2 17,067
Fibonacci 61.8% daily 17.0835
Daily Pivot Point S1 17.0219
Daily Pivot Point S2 16,996
Daily Pivot Point S3 16.9518
Daily Pivot Point R1 17,092
Daily Pivot Point R2 17.1362
Daily Pivot Point R3 17.1621

Source: Fx Street

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