The Mexican peso softens before the Banxico decision as the economic perspectives are considered

Mexican peso falls as traders preparing to reduce the rate of 50 databases among signs of inflation cooling and indigent economic activity.
Banxico expected to lower the rate by 50 BPS because the economy has signs of fatigue.
Economic activity remains opposite despite solid retail sales and marginal improvement in January.

The Mexican peso (MXN) is depreciated into the American dollar (USD) during a session in North America on Wednesday after the release of economic data during the week, which emphasized the evolution of the disinflation process, as well as weakening the economy. USD/MXN trades at 20.08, an escalate of 0.20%.

Traders are preparing for the Banco de Mexico (Banxico) monetary policy decision on Thursday. It is expected that the central bank will reduce rates by 50 base points (BPS) from 9.50% to 9% due to the evolution of the disinflation and signs process, that the economy slows down.

This week, the economic schedule of Mexico revealed that economic activity in January improved compared to December, but remained on the systolic territory for the second month in a row. Meanwhile, inflation data was positive, because the inflation of the first half in March fell in both heading and basic readings, which indicates the evolution of the disinfection process.

Other data showed that retail sales in January were solid, exceeding reading and forecasts from the previous month, but this is the first solid reading since April 2024, because sales have shrunk in the last eight in a row.

Given the background, further advantage is observable in USD/MXN. However, if US President Donald Trump makes tariff exclusions to Mexico, the economy’s prospects may improve. Hence, the peso can strengthen and exert down the exotic pair.

This week in Mexico in Docket he will balance the trade and decisions of Banx interest rates. On the other side of the border with the American schedule will be the release of the preferred Fed inflation indicator, the basic price indicator of personal consumption (PCE).

Daily Digest Market Movers: Mexican peso falls before the Banxico meeting

The study of Citi’s expectations has shown that most private economists expect Banxico to reduce rates by 50 base points. According to the survey, the main reference indicator of Mexico will end 2025 to 8%, compared to 8.25%.
The same surveys predict that USD/MXN ends at 20.98, compared to 21.00 in the last survey.
Inflation expectations remained anchored in a high range of 3%, while GDP is expected to escalate by 0.6%, compared to 0.8%in the last study.
Traders valued the FED to facilitate the policy by 64 base points (BPS) throughout the year, according to the data from the Chicago Board of Trade.

Technical perspectives USD/MXN: Mexican peso loses adhesion when USD/MXN rises after 20.10

USD/MXN remains biased. Although it refreshed the two -day height of 20.16, it fell below 20.10, paving the way to further decline. The relative force indicator (RSI) shows that the shoot does not support either buyers or sellers, pointing to uncertain trade conditions.

After saying, the first key support would be the number 20.00. If it is lowered, the next support would be a 200-day straight movable average (SMA) at 19.71, and then from September 18 the lowest level 19.06. On the other hand, if USD/MXN bulls cleaned the 20.20 mark, the exotic pair would be ready to test a runaway of a 100-day and 50-day SMA to 20.22 and 20.38 each, before the area of 20.50.