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USD/MXN soars above the 20 DMA and marks weekly gains after Banxico pause

  • USD/MXN posts its first weekly rise since April 28, currently trading at 17.7767, as risk-off sentiment prompts peso outflows from emerging markets.
  • Comments by US Treasury Secretary Janet Yellen and Fed Chair Jerome Powell on inflation prompted a shift towards safe-haven assets such as the US dollar.
  • Banxico’s interruption of its rate hike cycle and weaker-than-expected retail sales data in Mexico contribute to the weakening of the Mexican peso.

He USD/MXN breaks above the 20-day EMA as the pair posts its first weekly gain since April 28, more than 1%, ahead of the weekend. The Mexican peso (MXN) weakened after Banxico halted its tightening cycle, while strong US data warrants another Fed rate hike in June. At the time of writing, the USD/MXN pair is trading at 17.7767, up 0.30% on the day.

USD/MXN Fundamental Background: US Dollar Strengthens as Mexican Peso Falters on Safe Haven Flows.

Sentiment turned negative from the middle of the North American session, as Wall Street closed with modest losses. Comments by US Treasury Secretary Janet Yellen to bank chief executives on Thursday that more mergers might be necessary after a series of bank failures spooked investors. Therefore, flows into safe haven assets caused the emerging market peso to flee towards the safety of the US dollar.

Aside from this, the Fed’s comments throughout the week were split between dovish and hawkish. However, on Friday, Federal Reserve Chairman Jerome Powell said inflation is well above target and stressed that the Fed is firmly committed to bringing inflation back to the 2% target, adding that “the Failure would do more damage.” Powell said the banking system is robust, and rates may not rise as they otherwise would due to tightening bank credit conditions.

According to Bloomberg, US House Speaker Kevin McCarthy has put negotiations on the US debt ceiling on hold, blaming the White House for “resisting spending cuts, putting doubt efforts in Washington to avoid a catastrophic default.

On the Mexican peso front, Banxico decided to pause its 725 basis point rate hike, mentioning that the economy is undergoing a disinflationary process, as many pressures have subsided. However, Mexico’s central bank said it would keep the main benchmark rate at its current level for an extended period.

In terms of data, the Mexican Economic Agenda reported that March retail sales rose 2.5% year-on-year, below estimates of 2.9%, and below February’s 3.4% advance. In monthly terms, sales were at 0%, below the expected 0.1%.

USD/MXN Price Analysis: Technical Perspective

USD/MXN Daily chart

From a technical perspective, the USD/MXN downtrend remains intact, but Friday’s close above the 20-day EMA at 17.7712 opened the door for further gains. Upside risks lie at the April 2018 daily low at 17.9388, followed by the 18.0000 psychological level and the 50-day EMA at 18.0240. On the flip side, bears appear to remain in command as the RSI remains in bearish territory but is about to cross into a bullish zone. If USD/MXN resumes its slide, first support would be the May 19 low at 17.6187, followed by the May 18 low at 17.5757, before hitting the 17.5000 zone.


Last price today 17.7882
Today Change Daily 0.0706
today’s daily variation 0.40
today’s daily opening 17.7176
daily SMA20 17.8144
daily SMA50 18.1239
daily SMA100 18.4149
daily SMA200 19.1096
previous daily high 17.7791
previous daily low 17.5905
Previous Weekly High 17.8405
previous weekly low 17.5344
Previous Monthly High 18.4018
Previous monthly minimum 17.9329
Fibonacci daily 38.2 17.7071
Fibonacci 61.8% daily 17.6625
Daily Pivot Point S1 17.6124
Daily Pivot Point S2 17.5071
Daily Pivot Point S3 17.4238
Daily Pivot Point R1 17,801
Daily Pivot Point R2 17.8844
Daily Pivot Point R3 17.9896

Source: Fx Street

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