- The Mexican peso is expanding its profits in relation to the American dollar, because the markets take the mood of “risk” after relieving American tensions-china.
- USD/MXN remains in a compact -term bear tendency below 19.20.
- The US-Meticus’ tensions remain next week, when Mexico condemns 50% tariff to the import of steel and aluminum to the USA.
The Mexican peso (MXN) is experiencing its third profit day in a row compared to the US dollar (USD) on Friday, exceeding the USD/MXN exchange rate to the lowest level for eight months.
In connection with the listing of market pairs near the lowest level of October 19.11, the bears of compact -term trends are still ongoing. The couple traded for a moment on 19.09, the lowest level from mid -September.
Throughout the week, escalation and weaker USD are the basis for the MXN force. However, Thursday diplomatic and Friday events more than expected employment data in the US increased the complexity of a wider narrative.
The last move in USD/MXN reflects the combination of forceful national foundations in Mexico, including the growing trust of consumers and resistant export, along with global appetite at risk and disappearing expectations regarding the upcoming federal reserve rate (FED). The pair remains susceptible to further minuses if the tariff voltages escalate or if the Mexican government does not provide release from recently applied steel and aluminum tariffs in the USA.
Mexican Peso Daily Digest: USD/MXN weighs tariffs, growth prospects and consumer trust
- The Minister of Economy of Mexico Marcelo Ebrard is in Washington to meet with US officials and ask for release from the recently imposed 50% tariffs on the import of steel and aluminum. The Mexican government is trying to protect its industries and workplaces, and if the dismissal is not granted, it plans to announce its response next week.
- Friday report on the American payroll (NFP) on May surprised by the advantage. The US economy has added 139,000 modern jobs, overcoming the expectations of analysts regarding growth by 130,000. Meanwhile, the unemployment rate remained unchanged at 4.2%.
- The stronger than expected number of headers brought fleeting relief for the dollar, alleviating the fears that the federal reserve may require rapid action with rate reductions.
- According to the CME Fedwatch tool, the probability of cutting the July rate dropped rapidly to 16.5%, compared to 33.9% before issuing. The data temporarily softened the pressure on the Fed so that it works quickly, which suggests that decision -makers may soon take the patient’s attitude.
- On Thursday, Mexican consumer trust data was published, showing the number 46.5, which is an augment of 45.5 in April. On Thursday, Reuters announced that the Canadian prime minister called American tariffs “illegal”, while Mexico and the European Union expressed similar frustration.
- On Wednesday, Mexican President Claudia Sheinbaum called modern tariffs “unfair, unbalanced and without basics”, warning that if the contract is not reached, Mexico will be forced to respond to retaliation. Canada and the EU also threatened with revenge if you do not make progress in trade talks.
Technical analysis of USD/MXN: Barish Trend remains forceful below 19.20
The price in the Daily/MXN chart still strengthens the wider bearing structure. Because prices currently trade around 19.11 in October, the psychological level 19.20 is an critical resistance barrier for compact -term movement.
At the time of writing, the prices remain below both a 10-day straight movable average (SMA) at 19.26 and 20-day SMA at 19.33. 78.6% of Fibonacci’s weight loss level at 19.57, from a wider rally in October – FUTY, currently acts as a key level of resistance, which further limits all recovery attempts.
The relative force indicator (RSI) near 36 signals exceeds the shoot, although the indicator has not yet reached the conditions of sold out, which suggests the potential of further decline.
Daily chart USD/MXN
Hence, the bear scenario would be associated with a decisive break below the lowest level of 19.11, as a result of which the prices lost the lowest part of September 19.07, opening the door to the continuation of the bear in the direction of 19.00
On the other hand, the stubborn scenario would require a constant recovery above 19.28 (10-day SMA) and 19.34 (20-day SMA), and then a breakthrough above 19.60 resistance, which is in accordance with 23.6% extraction of the same October-lecture movement.
Mexican PESO questions
The Mexican peso (MXN) is the most traded currency among its peers from Latin America. Its value depends widely by the results of the Mexican economy, the policy of the Central Bank of the Country, the amount of foreign investment in this country, and even levels of monetary messages sent by Mexicans living abroad, especially in the United States. Geopolitical trends can also move MXN: for example, the newcombating process – or the decision of some companies to transfer production capacity and supply chains closer to their family countries – is also seen as a catalyst of the Mexican currency, because the country is considered a key production hub on the American continent. Oil prices are the next MXN catalyst, because Mexico is a key exporter of the goods.
The main goal of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in order or 3%similar to the purpose, the middle point in tolerance bands from 2%to 4%). For this purpose, the bank sets an appropriate level of interest rates. When the inflation is too high, Banxico will try to tame it by collecting interest rates, which makes it more exorbitant for households and companies to borrow money, and thus cooling demand and general economy. Higher interest rates are generally positive for the Mexican peso (MXN), because they lead to higher crops, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
The release of macroeconomic data is crucial for the assessment of the state of the economy and may affect the Mexican valuation (MXN). A forceful Mexican economy, based on high economic growth, low unemployment and high trust, is good for MXN. It not only attracts more foreign investment, but can encourage Bank Mexico (Banxico) to augment interest rates, especially if this force connects with increased inflation. However, if economic data is frail, MXN probably absorbs.
As a currency on the emerging market, Mexican peso (MXN) strives to strive during risk periods or when investors see that wider market risk is low, and therefore willingly engage in investments that have more risk. And vice versa, MXN tends to weaken during market turbulence or economic uncertainty, because investors usually sell assets with a higher risk and resort to more stable secure time.
