Mexican peso removes profits in relation to the American dollar for improved consumer sentiments in the USA

USD/MXN removes profits after positive sentiments, Michigan brings the American dollar higher.
The Mexican peso remains susceptible to wider risk moods, reducing USD/MXN losses.
US inflation moderates, but the Fed may not yet be willing to change the tone.

The Mexican peso (MXN) shows renewed signs of weakness in relation to the American dollar after expectations and sentiments of Michigan, which provided relief for Greenback.

At the time of writing, USD/MXN trades between the mental level of 19.30 and 19.40, with a 10-day and 20-day straight movable average (SMA), providing additional support and resistance to the couple.

Data on US sentiments Michigan weighs peso, limiting USD losses

Preliminary data of the University of Michigan on May, issued on Friday, showed a slight improvement in consumers’ moods and expectations, offering mixed, but a slightly more confident view of the perspectives of households in the USA.

The consumer mood indicator increased to 52.2, compared to 50.8, which indicates a slight reflection of general trust. Meanwhile, the consumer expectations indicator increased to 47.9 of 46.5, which indicates that although consumers remain cautious in the future, their expectations have slightly improved.

Both readings remain historically low, but indicate a slight alleviation of pessimism, probably reflecting the stable labor market and slower inflation in recent months.

Piątkowa American consumer price index in the USA (PCE) for April showed an augment of 0.1%MOM by 0.1%, slightly compared to the unchanged March rate. Yoy’s drawing dropped to 2.1% from 2.3%. Core PCE increased to 2.5%, compared to 2.7% in the previous month. These data are suggested by pigeons prospects for future interest rates in the USA.
The preferred measure of the Federal Reserve inflation (FED) is closely monitored by decision -makers, investors and currency markets. Current data indicate that price pressure soothes, which affects the expectations of future interest rates.
In Mexico, the unemployment rate for April, issued at 12:00 GMT, printed at 2.5%, according to analysts’ forecasts, despite the augment of 2.2% in March. Employment trends are a leading economic growth indicator.
Banxico minutes from the May meeting on Thursday have shown that most members see the risk related to economic activity; All members marked concerns about the uncertainty of commercial policy in the USA. This strengthens the pigeons prejudices from the central bank, with a greater facilitation potentially on the table.
On Wednesday, the quarterly Banxico report revealed that the Central Bank reduced the gross domestic product growth forecast for 2025 (GDP) to 0.1% from 0.6%, citing the growing risk of domestic recession. Market attention is addressed to the calibration of politics in connection with the deteriorating growth prospects.
The protocol from the May Federal Open Committee (FOMC) was published on Wednesday. In the report, FED officials emphasized increased uncertainty and supported a cautious approach.
USD/MXN remains very sensitive to data surprises, especially when they affect monetary policy or wider global moods. The price will probably be reactive, and the potential of acute swings should be actual details from expectations.

Mexican technical analysis PESO: USD/MXN Bulls are coming back

USD/MXN currently has a strict extent between a 10-day straight movable average (SMA) at 19.31 and 20-day SMA at 19.42, reflecting indecision after lasting durability.

The break above the 20-day SMA would cause 78.6% of Fibonacci’s revival in the Rally of October and Futy (nearly 19.58) and a successful exit beyond what could open the door to 23.6% FIB April-a decline of about 19.63. The relative force indicator (RSI) has increased to 45, which indicates that the bears are disappearing, although it has not yet signaled stubborn strength.

On the other hand, a break below 10-day SMA support and psychological support in 19.30 would confirm the bear’s control, potentially reducing prices to earlier resistance to 19.28, and they have a low level 19.18. This makes the current offer a critical battlefield in the brief -term direction.

Daily chart USD/MXN

FAQ in American dollars

The American dollar (USD) is the official currency of the United States of America and the “de facto” currency of a significant number of other countries where it is in circulation with local notes. It is most often a commercial currency in the world, which is over 88% of all global currency turnover, i.e. an average of $ 6.6 trillion of transactions per day, according to the data from 2022. After the Second World War, USD took over from the British pound as the reserve currency of the world. For most of its history, the American dollar was supported by gold, up to the Bretton Woods agreement in 1971, when the golden standard disappeared.

The most significant single factor affecting the value of the American dollar is the monetary policy, which is shaped by the Federal Reserve (FED). The Fed has two seats: achieving price stability (control inflation) and supporting full employment. Its main tool to achieve these two goals is to adjust interest rates. When the prices rise too quickly and inflation is above 2% of the Fed target, the FED will augment the rates, which helps USD values. When inflation drops below 2% or the unemployment rate is too high, the Fed may reduce interest rates that are weighing in the green area.

In extreme situations, the Federal Reserve can also print more dollars and introduce quantitative alleviation (QE). QE is a process in which the Fed significantly increases the credit flow in the detained financial system. It is a non -standard policy measure used in the event of a loan desiccated, because the banks will not borrow (for fear of the contractor). This is the last last, when just lowering interest rates is unlikely to achieve the necessary result. The weapon of choosing the Fed was a FED weapon to combat the credit crisis, which took place during the great financial crisis in 2008. This includes FED printing more dollars and using them to buy US government bonds mainly from financial institutions. QE usually leads to a weaker American dollar.

Quantitative twist (QT) is the opposite process in which the federal reserve stops buying bonds from financial institutions and does not reinvest from the bonds that it has in up-to-date purchases. This is usually positive for the American dollar.