The Mexican Peso (MXN) extended its losing streak against the US Dollar (USD) for the fourth consecutive day, trading above 19.00 for the third straight day. This decline is driven by a combination of factors, including weak economic data from Mexico, increased expectations of a Bank of Mexico (Banxico) rate cut, and a rebound in the US Dollar despite a more positive US economic outlook.
Market Sentiment:
Although risk appetite improved in the broader market, the Mexican Peso failed to benefit. Geopolitical risks in the Middle East and uncertainty surrounding Banxico’s upcoming policy decision continue to weigh on the currency.
Economic Indicators:
- Mexico: Auto Production growth slowed in July, while Auto Exports declined, highlighting the ongoing economic slowdown.
- US: The ISM Services PMI for July exceeded estimates, suggesting a resilient US economy despite the recent contraction in the manufacturing sector. This positive data has led to a decrease in expectations for aggressive Fed rate cuts.
Outlook:
The Mexican Peso’s near-term outlook remains uncertain. Upcoming inflation data from Mexico and the Fed’s policy meeting will likely be key drivers of the currency’s performance in the coming days.
Technical Analysis:
The USD/MXN pair is in a strong uptrend, having broken above the 19.00 psychological level. The bullish momentum is supported by the RSI, which is currently in overbought territory. The next resistance levels are 19.50 and the year-to-date (YTD) high at 20.22.
On the downside, support lies at 19.00, followed by the August 1 swing low of 18.42 and the 50-day SMA at 18.17.
