- Bank of Mexico raises interest rate and suggests that there will be more.
- Mexican peso rises for the fifth consecutive day against the dollar.
- USD/MXN tests 19.90.
The USD/MXN is falling for the fifth day in a row, after Banxico’s interest rate hike. The pair is trading in the lows of the week around 19.90, with a clear bearish tone.
The dollar Friday presents mixed results. It is paring weekly losses against major currencies, supported by an advance in Treasury yields.
The Mexican peso remains firm and received support from the Bank of Mexico. The monetary authority, as expected, raised the benchmark interest rate by 75 basis points to 8.50%. The rises are given to deal with inflation and the increase in rates in the US.
In Mexico, the Consumer Price Index rose to 8.15% (annual) in July, the highest in decades. With no signs of slowing down and with the CPI well above the central bank’s target, rate hikes are expected to continue through 2023.
On the technical side, if USD/MXN breaks below 19.90, 19.81 (27 Jun low) is the next major support, followed by 19.73. In the opposite direction, 20.05 is the first major resistance, followed by the 200-day moving average at 20.15 and then the 20-day moving average at 20.35.
Technical levels
Source: Fx Street
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