Mexican peso trades near fresh YTD High in relation to the American dollar

USD/MXN trads below 19.20 after testing the recent low YTD at 19.16.
ADP ADP services and ISM PMI services Data omitted the forecasts.
Mexico reacts to increased tariffs to the import of steel and aluminum to the USA.

The Mexican peso (MXN) trads on Wednesday near a fresh annual level to the American dollar (USD), which provides support for the USD/MXN pair above 19.16.

Since economic data published from the United States (USA) emphasized the signs of economic fragility, commercial voltages between the USA and its global trading partners are constantly growing.

With a tariff for importing aluminum and steel to the USA rising to 50%on Wednesday, the Minister of Economy of Mexico, Marcelo Ebrard, announced that Mexico would demand release from tariffs on Friday.

During the morning conference, the Mexican President Claudia Sheinbaum announced that the growth was “a dishonest measure.” The president also stated that Mexico would announce remedies against the US if he did not reach any agreement by next week.

“It’s not a matter of revenge or retaliation, as they call it in English,” she said. “It’s a matter of protecting our jobs and our companies,” added Sheinbaum.

Meanwhile, other nations, such as Japan and Canada, express similar fears and frustrations in response to Trump’s tariff policy, which caused the demand from the American dollar and to alternative assets.

On Thursday, Mexico will publish consumer trust in May. After reading the April 45.5, it serves as a reference point, all surprises of pros or decline can additionally affect the direction of Mexican peso.

For the US, weekly data on unemployed claims will be published at 12:30 GMT, shedding lithe on the US employment situation before the Friday report May non -farm Payrolls (NFP).

Mexican Peso Daily Digest: USA employment data remain in the spotlight

On Wednesday, data on ADP employment in the US indicated that the US private sector added 37,000 jobs in May, there is a lack of analysts’ forecasts by 115,000 elevated.
The Institute of Supply Management has published the latest report from May, which reflected the weakening of business conditions in the American Services Sector.
Because analysts expect ISM services to raise to 52, reading 49.9 reflects the potential weakness in the perceived business conditions of the service sector, which is the largest factor contributing to the gross domestic product (GDP) in the US.
On Thursday, initial unemployment claims at 235,000 are forecasted, compared to 240,000 printouts last week.
Focus remains on Friday NFP numbers, which is expected that 130,000 recent jobs were added in May, compared to 177,000 in April.
Meanwhile, the unemployment rate is expected to remain at 4.2%, reflecting the resistant labor market in the USA.
According to the CME Fedwatch tool, market participants are currently valued at a 56% chance of reduction of the rate by 25 BPS in September. At meetings in June and July, the FED is expected to maintain its comparative rate in the current range 4.25%-4.50%.
On Thursday, consumer trust in May will provide insight into how individuals and consumers in Mexico perceive the resistance of the economy in the face of the current economic risk, as well as their expectations regarding brief -term growth prospects.

Mexican technical analysis PESO: USD/MXN bears regain control

USD/MXN is trading below the psychological level of 19.20, providing brief -term resistance to the couple. With a 10-day straight movable average (SMA) at 19.29, the above movement may observe the loser at the psychological level 19.30.

Daily chart USD/MXN

The 20-day SMA is 19.36, the break of which can allow bulls to continue prices towards the next main level of technical resistance, the lowest April to 19.47.

On the other hand, a break below the lowest level of 19.18 may restore the bears of the shoot, potentially reducing prices towards Wednesday’s next 19.16. Below is the lowest October 19.11, ensuring the potential of the psychological level 19.00.

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 high-priced 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 raise interest rates, especially if this force connects with increased inflation. However, if economic data is tender, 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 safe and sound time.