US Dollar drops dramatically after October US CPI data. (Pivot Orderbook analysis)

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• US Dollar drops dramatically after October US CPI data.
• Banxico to announce monetary policy decision: a dovish last hike?
• USDMXN consolidating bearish bias, 19.00 on the radar.

The pair currently trades last at 19.4134.

The previous day high was 19.6321 while the previous day low was 19.5094. The daily 38.2% Fib levels comes at 19.5852, expected to provide resistance. Similarly, the daily 61.8% fib level is at 19.5563, expected to provide resistance.

The USDMXN dropped from above 19.50 to 19.35, hitting a fresh cycle low. It is hovering around 19.40, under pressure after US CPI numbers that weighed on the Dollar and ahead of Banxico’s decision.

The US Consumer Price Index (CPI) climbed 0.4% in October below the 0.6% of market consensus. The annual reading fell to 7.7%, the lowest level since January. The greenback collapsed after the reports and equity prices jumped.

In Wall Street, the Dow Jones is up by 2.45% and the Nasdaq by 5.68%. US yields are falling by almost 6%. The US Dollar Index is losing 1.77%, at the lowest since mid-September.

The inflation numbers from the US are welcome news not only for the Fed and the White House but also should be cheered in Mexico. With the Fed being less aggressive in raising rates, Banxico could face less pressure.

The CPI report came out just as the Bank of Mexico holds its monetary policy meeting. A decision will be announced in a few hours. A 75 basis points rate hike is expected, bringing the key rate to 10%. A dovish tone seems likely, not only after inflation figures from the US and Mexico, but also as the Dollar tumbles across the board.

A dovish Banxico is not necessarily bad for the Mexican Peso. US yields and risk appetite are also key factors for the performance of MXN which so far during 2022 is among the biggest gainers.

Technical Levels: Supports and Resistances

EURUSD currently trading at 19.4134 at the time of writing. Pair opened at 19.5824 and is trading with a change of -0.86 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 19.8251, 50 SMA 19.9623, 100 SMA @ 20.1234 and 200 SMA @ 20.1736.

The previous day high was 19.6321 while the previous day low was 19.5094. The daily 38.2% Fib levels comes at 19.5852, expected to provide resistance. Similarly, the daily 61.8% fib level is at 19.5563, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 19.5172, 19.4519, 19.3944
• Pivot resistance is noted at 19.6399, 19.6973, 19.7626

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