The Mexican Peso (MXN) is facing a tough week as it has lost an average of 5% across its most traded pairs. This decline can be attributed to various factors including cooler inflation data, weak retail sales, and political uncertainties.
Technically, the USD/MXN pair continues to trend higher within a rising channel, indicating further weakness for the Peso.
Key Factors Contributing to Peso Weakness
The recent decline in Mexican inflation data, coupled with weaker retail sales and concerns over proposed government changes, have all added pressure on the Peso. Additionally, the unwinding of the carry trade has further impacted the currency’s value.
Lower interest rates in Mexico, which are expected to be cut further in September, are also weighing on the Peso as they reduce foreign capital inflows.
Currently, the exchange rates stand at 19.49 for USD/MXN, 21.69 for EUR/MXN, and 25.57 for GBP/MXN.
Impact on Major Currency Pairs
The Peso has seen the most significant decline against the Pound Sterling, followed by the Euro and the US Dollar. Despite negative data from the Eurozone and the US, the Peso continues to weaken against these currencies.
Technical Analysis: USD/MXN Continues Uptrend
The USD/MXN pair is rallying within a rising channel, with a potential move towards 20.50. A break above 19.61 would confirm a bullish trend.
The overall trend for USD/MXN remains positive, indicating further upside potential for the pair.
Summary and Analysis
The Mexican Peso is facing significant challenges this week, with a notable decline in its value across major currency pairs. Economic factors such as inflation data, retail sales, and political uncertainties are contributing to the Peso’s weakness.
Investors should closely monitor the Peso’s performance against other currencies and consider the impact of interest rate changes and economic data releases on the currency’s valuation. Overall, the outlook for the Peso remains bearish, with potential for further depreciation in the near term.