Mexican Peso Retreats as US Dollar Gains Ahead of Fed Decision

USD_MXN-analysis image

The Mexican Peso (MXN) weakened against the US Dollar (USD) in early North American trading as the USD gained strength. Speculation about a potential easing

The Mexican Peso (MXN) weakened against the US Dollar (USD) in early North American trading as the USD gained strength. Speculation about a potential easing of policy by the Bank of Mexico (Banxico) on Thursday added to the MXN’s downside pressure. USD/MXN trades at 16.82.

Key Factors:

  • Banxico Outlook: Growing expectations for a dovish Banxico shift weigh on the MXN.
  • Fed Decision Looms: Traders adjust positions ahead of Wednesday’s critical Federal Reserve decision and policy guidance.
  • Positive US Data: Improving US housing figures bolster the US Dollar.

Technical Outlook:

  • Neutral Bias Emerges: USD/MXN has shifted to a neutral bias after buyers pushed the price above the January 8 swing low (16.78).
  • Key Resistance: The 17.00 level, followed by the 50-day, 100-day, and 200-day SMAs, present significant upside barriers for the USD/MXN.
  • Support Levels: A break below 16.80 could trigger a move towards last year’s low (16.62), followed by the October 2015 low (16.32) and the 16.00 psychological level.

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