USD/MXN moderates slightly from 9-day highs at 17.77 just before Banxico

• USD/MXN has reached a nine-day high of 17.77 during the American session on Thursday.
• The focus is on Banxico, which publishes its interest rate decision at 19:00 GMT.

The USD/MXN has risen strongly this Thursday, rising from the intraday low of the Asian session 17.59 to the new nine-day top at 17.77 during the American session. A few minutes after Banxico’s announcement, the pair moderates its momentum and falls back to around 17.70.

All eyes on Banxico after good US data.

The United States released several data today with results that were better than forecasts, which has given fresh impetus to the USD, taking it to multi-week highs against its main competitors. The index DXY has reached in the last hour a new two-month high at 103.62. The weekly jobless claims for the week of May 12 fell by 22,000 to 242,000, when 254,000 were expected. On the other hand, the Philadelphia Fed’s manufacturing index improved to -10.4 in May against the -19.8 expected by the market.

The focus for the operators of the Dollar against the Mexican Peso now await the Banxico’s monetary policy decision. The market consensus considers that the central bank of Mexico will keep raising rates on hold in May, after raising them 25 basis points in March, up to the current 11.25%. An unexpected rate hike could lead to large moves in USD/MXN, which would also suffer from strong volatility in the much less likely event of a cut. In any case, attention will also be on the statement and its references to inflation, which we remember fell to 6.25% in April, its lowest level in 18 months.

USD/MXN Levels

With the pair trading above 17.71 at time of writing, gaining 0.65% on the day, the first resistance awaits at the 17.83/84 zone, where the maximums of May 9 and 8 are. Higher up awaits the psychological zone of 18.00. A clear break above this level will point to 18.20ceiling of April 27 and of the last seven weeks.

On the downside, a break of the seven-year low in 17.42 it could trigger a pullback towards 17.05, the lowest level of 2016 recorded on April 29 of that year. Below the psychological zone of 17.00 wait for support 16.95floor of December 18, 2015.