The Mexican Peso faced a sharp decline against the US Dollar as Banxico revised down Mexico’s growth expectations for 2024 and 2025. Political turmoil surrounding judiciary reform and autonomous bodies added further pressure on the Peso. Banxico also anticipates inflation to reach the 3% target by late 2025, with risks to growth skewed downwards due to the slowing US economy.
On Thursday, the USD/MXN pair traded at 19.77, marking a gain of over 0.70% as robust US data boosted the Greenback. President-elect Claudia Sheinbaum’s reassurances to foreign investors amidst the ongoing political unrest failed to alleviate concerns.
Banxico’s quarterly report revealed downward revisions in GDP forecasts, citing market weakness and uncertainty in national economic activity. The central bank highlighted the need for gradual adjustments to interest rates depending on macroeconomic conditions.
Market Movers: Mexican Peso in Turmoil as Political Tensions Rise
- President AMLO’s decision to pause relations with US and Canadian ambassadors continues to weigh on the Mexican Peso.
- US Ambassador’s comments on judiciary reform sparked tensions, impacting the Peso’s outlook.
- US GDP for Q2 2024 exceeded estimates, while jobless claims dipped, reflecting a mixed economic picture.
- Fed speakers and inflation data will be closely watched for market direction.
Technical Analysis: USD/MXN Hits Two-Week High
The USD/MXN pair is on the verge of surpassing the 20.00 level, indicating an upward trend. The Relative Strength Index (RSI) suggests bullish momentum, with resistance levels at 20.00 and 20.22. Conversely, a drop below 19.50 could lead to support levels at 19.00 and 18.59.
Expert Analysis: Understanding the Mexican Peso
The Mexican Peso’s value is influenced by various factors, including economic performance, central bank policies, foreign investment, and geopolitical trends. Banxico’s goal of maintaining low inflation through interest rate adjustments impacts the Peso’s strength. Strong macroeconomic data supports the Peso, while market risk sentiment also plays a crucial role in its valuation.