- The USD/MXN pair ended flat on Friday, after rallying to a fresh two-week high around $18.60.
- The US Bureau of Labor Statistics revealed that the US economy added more jobs than expected.
- A rise in the US unemployment rate would justify a less dovish Federal Reserve.
The pair USD/MXN It remains mostly flat after hitting a daily high at 18.5964, although the mixed US jobs report weighed on the dollar. However, USD/MXN continues to hold on to its gains, rising 0.12% and trading at 18.3707.
US Nonfarm Payrolls and Unemployment Rate Rising, with Fed in Focus
Sour sentiment in the US over the Silicon Valley bankruptcy overshadowed US economic data. The US Bureau of Labor Statistics (BLS) released the US Nonfarm Payrolls report for February, with numbers beating expectations of 225,000 as the US economy created 311,000 Job positions. Although the data suggests further tightening by the Federal Reserve, the Unemployment Rate stood at 3.6%, above the 3.4% forecast, indicating a weaker labor market.
The data for the previous month was revised downward, from 517,000 to 504,000. Median Hourly Earnings increased 4.6%.
Meanwhile, the Dollar Index (DXY), which tracks the dollar’s value against a basket of six currencies, fell 0.87% to 104.365. US Treasury yields tumble across the board, with the 10-year yield down nearly 20 basis points to 3,712%.
A reflection of the above is that traders are assessing a less hawkish Fed compared to Powell’s speech on Tuesday. Market futures estimate a 25 bps rate hike in March and anticipate the first rate cut by the end of the year.
The lack of economic data on the Mexican agenda keeps traders on the lookout for sentiment news. US regulators have shut down Silicon Valley Bank, as the bank has been seized by the FDIC.
USD/MXN Technical Analysis
USD/MXN has turned from neutral to downside after buyers recaptured the 20-day EMA at 18.3247. The US jobs report helped the Mexican peso (MXN) and capped the pair’s recovery towards a weekly high of 18.5964, sending it away from the 50-day EMA at 18.6442. As the American session progresses, the Friday candlestick turns into an inverted hammer, which could form an evening star pattern. A new drop in USD/MXN is expected if this scenario is fulfilled. For a bearish continuation, USD/MXN sellers need to recapture $18.15. On the other hand, buyers holding the USD/MXN rate above the 20 day EMA would still look to test the 50 and 100 day EMAs next week around 18.644 and 19.0122.
What is there to watch out for?
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.
