- The Mexican peso is up across the board on Thursday.
- Banxico meeting: a 25bps rate hike is expected.
- USD / MXN could post the lowest close in nearly a month.
The USD/MXN falls for the second day in a row the Thursday before Banxico’s decision. The combination of a stronger Mexican peso and a weaker dollar against commodities and emerging market currencies pushed the pair down. At the time of writing, the pair hovers around the 20.87 level, close to monthly lows.
After climbing to 21.35 on Wednesday immediately after the FOMC meeting, the USD / MXN turned lower and has been falling ever since. Currently, it is trading below 20.90, targeting the December low of 20.83. A consolidation below 20.85 / 90 should add more strength to the Mexican peso. The next barrier is at 20.65.
If USD / MXN manages to stay above 20.85 / 90, a rebound to 21.05 seems likely in the near term. Higher up, the next resistance is at 21.20 which also contains the 20-day moving average.
Banxico will raise rates again
Among emerging market currencies, the Mexican peso is one of the best performers on Thursday before Banxico’s decision. Market participants expect Banco de México to raise the key interest rate by 25 basis points to 5.25%. Some mentioned a possible 50bps upload. Inflation increased further above 7%; and together with the new message from the Fed it poses a challenge to Banxico.
USD / MXN technical levels
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