- Mexican peso trades below 19.30, under the influence of risk moods affecting the currency of the emerging market (EM), even among the weaker American dollar.
- The threat of the Trump tariff towards the EU is shown by growing commercial tensions and unpredictable prospects for global growth.
- USD/MXN was unable to overcome the average movable resistance.
The Mexican peso (MXN) remains stable in relation to the US dollar (USD) despite the threat of US President Donald Trump through a wide tariff to the European Union (EU).
At the time of writing, USD/MXN trades below the key psychological level of 19.30, and traders digest development from Mexico and the United States.
The recession is afraid of the growth proposed by Trump by a 50% tariff growth for EU imports
On Friday, data from the trade balance of Mexico showed that in April the country recorded a commercial deficit of $ 88 million, below the forecast of $ 160 million by analysts.
The report, published by the National Institute of Statistics and Geography of Mexico (Inegi), reflects the difference between the export of the country and its import. Despite the publication of a narrower trading deficit than the expected, it is still a swing from a surplus $ 3.442 billion reported in March.
Meanwhile, Trump published a post about his social media in Truth Media, offering a 50% tariff for imports from the EU, it is expected to enter into force on June 1. Trump said that the EU was “very difficult to cope” and “our negotiations are not going anywhere.”
Recent changes in the US include the adoption of the “One Big Beautiful” Trump’s tax account and the reduction of Moody’s credit rating. These events contributed to the weaker dollar, which increased the demand for alternative assets.
Mexican Peso Daily Digest: USA fiscal and tariff concerns remain
- The proposed tariffs of 50% in the EU and 25% in the Apple range are concerned about their impact on the global economy.
- In addition, the fiscal concerns regarding the adoption of the tax account proposed by Trump. The “large, beautiful account” is expected to enhance the US Federal deficit by USD 3.8 trillion in the period 2026-2034, in accordance with the American Congress Budget Office.
- A recent reduction in the Moody agency rating in combination with President Trump’s tax account weighed the American dollar. Reduction of rating reflects the reduced faith in the US in debt repayment.
- The CME Fedwatch tool indicates 94.7% the probability that interest rates will remain in the current range 4.25% -4.50% in June, and analysts do not expect any Fed reduction until September.
- Because the Bank Mexico (Banxico) reduced interest rates by 0.50% at its meeting, the discrepancy of interest rate differences between the two countries should support the demand for USD.
- However, on Thursday, the first semi -production inflationary data of Mexico brought higher than expected at 0.09%, reflecting the enhance in price pressure.
- Thursday data also showed that the domestic product of Mexico (GDP) increased by 0.2% during the IO quarter of 0.8% per year, as market expectations.
- Because the economy is seen as resistant despite increased tariffs from the US, it can reduce pressure on Banxico to continue lowering rates in the near future.
Mexican technical analysis PESO: Steadie USD/MXN below 19.30
USD/MXN fell below 19.30, with prices consolidated below the 10-day and 20-day straight movable average (SMA) at appropriate levels 19.39 and 19.49.
From a break above 19.30, potentially introducing these levels, movement and re -reports from May to 19.23, would suggest that sellers remain under the control of this trend.
Daily chart USD/MXN
The relative strength (RSI) indicator is 38.92, which shows that the shoot is demanding.
If he stopped, the re -reports of 19.23 would bring the lowest level of October 19.11, with another layer of support at the next psychological level 19.00.
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 critical 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 enhance 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 dehydrated, 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 novel purchases. This is usually positive for the American dollar.
