The Mexican Peso (MXN) has made a strong recovery, gaining over 1% against major currencies on Wednesday. This follows a significant decline earlier in the week due to concerns surrounding the recent election results. Finance Minister Rogelio Ramírez de la O’s reassurances regarding fiscal discipline and investment continuity helped to ease investor fears.
Economic data released on Wednesday revealed a drop in consumer confidence to a seven-month low, adding to the complex economic picture. At the time of writing, USD/MXN traded at 17.52, EUR/MXN at 19.03, and GBP/MXN at 22.37.
De la O’s Intervention and Election Outcomes
The Peso’s rebound was largely attributed to Finance Minister De la O’s comments emphasizing financial discipline, adherence to the rule of law, and support for both national and foreign private investment. While final election results are still pending, estimates indicate a potential supermajority for the Morena party in the lower house of parliament, raising concerns about potential economic reforms under President-elect Claudia Sheinbaum.
Economic data released on Tuesday showed an unexpected slowdown in gross fixed investment, particularly in the transportation equipment sector. Investors will be closely monitoring upcoming consumer confidence data for further insights into the economic landscape.
Technical Analysis: USD/MXN Retraces from 100-week SMA
USD/MXN surged to its second upside target at 18.12, the 100-week Simple Moving Average, but has since retreated. Despite the short and intermediate-term trends indicating a bullish outlook, the Relative Strength Index (RSI) suggests the pair is overbought, increasing the likelihood of a correction.
Potential support levels for the pullback include 17.34 and the old trendline in the 17.10s. A break below these levels could signal a potential reversal in the short and intermediate-term trends. While the long-term trend remains bearish, a sustained pullback could lead to a significant reversal lower.
