The US Dollar to Mexican Peso exchange rate at 17.1104 is moving horizontally but is moving closer to its highest point of the day, with a 0.16% increase, thanks to the strengthening of the US Dollar.

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• USD/MXN trades sideways but shifts toward daily highs, with a 0.16% gain, as the US Dollar finds strength.

The pair currently trades last at 17.1104.

The previous day high was 17.124 while the previous day low was 17.046. The daily 38.2% Fib levels comes at 17.0942, expected to provide support. Similarly, the daily 61.8% fib level is at 17.0758, expected to provide support.

USD/MXN traded sideways on Thursday after reaching a daily low of 17.0463, but data from the United States (US) bolstered the US Dollar, lifting the USD/MXN pair toward its daily highs. Nevertheless, as the greenback stabilized, the USD/MXN retreated from its high, exchanges hands at 17.1136, gains 0.16%.

US economic data revealed that the country grew faster than expected, with the Gross Domestic Product (GDP) for the first quarter rising by 2.0%, above prior’s readings of 1.3%. At the same time, Initial Jobless Claims for the last week rose by 239K, below estimates of 265K, halting three consecutive reports trend of 260K plus claims, which erroneously suggested the labor market was cooling.

Consequently, US Treasury bond yields surged, with the 2-year note yield reaching 4.9%, its highest level since March 15, while the US Dollar Index (DXY), a measure of the greenback’s value against a basket of peers, advanced 0.33%, up at 103.302, a tailwind for the USD/MXN.

Given that US economic data is proving solid during the last month, expectations had grown about further tightening by the US Federal Reserve (Fed). During the Eurozone (EU) session, Fed Chair Jerome Powell crossed newswires emphasizing that the majority of the Federal Reserve Open Market Committee (FOMC) expects two additional rate hikes towards the year’s end amidst high inflation data and a tight labor market.

Odds for a 25 bps rate hike in July increased to 87%, while traders shifted their view of only one rate increase as chances for the November meeting augmented to 33.7%, according to the CME FedWatch Tool.

Across the border, Mexico’s lack of economic data keeps USD/MXN traders leaning into the US Dollar dynamics and market sentiment, which turned risk-averse after US data.

The USD/MXN is trading sideways, nearby the lows of the year, reached on June 16 at 17.0219. Even though oscillators suggest that further downside is expected, the Relative Strength Index (RSI) indicates buyers are entering the market. However, they lack the strength to lift the pair towards its most important resistance level, the May 17 daily low of 17.4039. A breach of the latter could increase buying pressure and lift the USD/MXN to test the 50-day Exponential Moving Average (EMA) at 17.5247. Otherwise, a drop below 17.1000 would keep sellers eyeing the 17.00 mark.

Technical Levels: Supports and Resistances

USDMXN currently trading at 17.1017 at the time of writing. Pair opened at 17.092 and is trading with a change of 0.06 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 17.2444, 50 SMA 17.5813, 100 SMA @ 17.9628 and 200 SMA @ 18.7329.

The previous day high was 17.124 while the previous day low was 17.046. The daily 38.2% Fib levels comes at 17.0942, expected to provide support. Similarly, the daily 61.8% fib level is at 17.0758, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 17.0507, 17.0094, 16.9728
• Pivot resistance is noted at 17.1286, 17.1653, 17.2066

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