The Mexican Peso’s Upward Trend and Recent Developments
- The Mexican Peso continues its upward trend for the fourth consecutive day amid favorable risk sentiment.
- Banxico’s recent rate cut to 10.25% reflects ongoing inflation concerns with forecasts adjusted to 4.7% end for 2024.
- Moody’s adjustment of Mexico’s credit outlook to negative highlights potential fiscal and economic challenges from judicial reforms.
- Traders monitor potential impact of Trump’s economic policies on Fed’s rate decisions.
The Mexican Peso has been making significant gains against the US Dollar, with a rise of 0.39% during the North American session at the beginning of the week. Key factors influencing this movement include recent developments in Mexico and the US, particularly the Bank of Mexico’s (Banxico) interest rate cut and US inflation data. Currently, the USD/MXN trades at 20.27.
Banxico’s Rate Cut and Inflation Concerns
- Banxico lowered rates by 25 basis points to 10.25% as expected, citing ongoing inflation risks.
- The central bank revised its inflation forecast to 4.7% by the end of 2024, up from previous estimates.
Moreover, Moody’s negative adjustment to Mexico’s credit outlook draws attention to potential challenges stemming from judicial reforms that could impact the country’s economic and fiscal stability.
Market Response to Trump’s Policies and Fed’s Rate Decisions
- Traders are closely monitoring the potential impact of Trump’s economic policies on the Federal Reserve’s rate decisions.
- Despite uncertainties, the Fed is expected to cut rates by 25 basis points, with odds favoring a rate cut according to the CME FedWatch Tool.
Daily Digest Market Movers: Mexican Peso Advances
- Banxico’s rate cut to 10.25% was in line with expectations, reflecting a balanced approach to inflation concerns.
- Officials anticipate inflation to reach the 3% target by the last quarter of 2025.
- The USD/MXN remains under pressure as the US Dollar weakens against a basket of currencies.
- Comments from Fed officials suggest a cautious approach to rate cuts, emphasizing the importance of a healthy economy.
- Market data indicates investor expectations of further Fed easing by the end of 2024.
USD/MXN Technical Outlook
The USD/MXN uptrend persists, with the Peso gaining ground against the Dollar. Key levels to watch include:
- Support: 20.00, 19.75, 19.50
- Resistance: 20.50, 20.69, 20.80, 21.00, 21.46
Oscillators like the RSI suggest further upside potential for the USD/MXN pair.
Mexican Peso FAQs
For those seeking more information on the Mexican Peso, here are some frequently asked questions:
- Factors influencing the MXN value
- Role of Banxico in maintaining inflation
- Impact of macroeconomic data on MXN
- MXN behavior during risk-on and risk-off periods