The USDMXN is staying around 17.5684, close to the 17.5942 level. The lack of new economic triggers and cautious remarks from the Federal Reserve are preventing the pair from moving much.

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• USD/MXN hovers around 17.5684, as lack of fresh economic catalysts and dovish Fed comments keep the pair in check.

The pair currently trades last at 17.5942.

The previous day high was 17.7094 while the previous day low was 17.4216. The daily 38.2% Fib levels comes at 17.5995, expected to provide resistance. Similarly, the daily 61.8% fib level is at 17.5316, expected to provide support.

The Mexican Peso (MXN) recovered some ground against the US Dollar (USD), though it remains near its week’s lows, while the USD trades soft, printing modest losses. The lack of an economic catalyst and a risk-on impulse keeps the USD/MXN pair oscillating at around 17.5684 after hitting a daily low of 17.4380.

The Greenback is trading softer on Friday, as it’s headed to print weekly gains for an eighth consecutive week after reaching a six-month high of 105.057. Hence, the USD/MXN pair halted its rally despite data from the United States (US) depicting a solid economy, as business activity remains firm. At the same time, due to the latest unemployment claims data, the labor market is not as loose as expected by the US Federal Reserve.

Given the backdrop, traders braced for additional tightening by the Fed. Even though interest rate probabilities discount a September rate hike, November’s odds remain at 43.6% for a 25 bps increase. This spurred high US bond yields, underpinning the USD/MXN pair. However, appetite for US bonds keeps yields pressured.

Aside from this, the USD/MXN is pairing some of its earlier losses due to dovish comments from Fed officials. The New York Fed President John Williams and Atlanta’s President Raphael Bostic are amongst the most dovish officials in the Federal Reserve, with the former saying that monetary policy is “in a good place.” Contrarily, Dallas Fed President and 2023 voter Lorie Logan added that skipping a rate hike may be appropriate but stressed the Federal Funds Rate (FFR) needs to be at higher levels.

That said, investors trimmed some of their USD/MXN long positions after Mexico’s revealed inflation eased to its lowest level since March 2023 to 4.64% YoY in August. The Bank of Mexico Deputy Governor Jonathan Heath highlighted the same report, saying that core inflation slowing towards 6.08% YoY was “good news” while stressing that there is a long way to go.

Next week, the US agenda will feature inflation data, Retail Sales, unemployment claims, Industrial Production, and Consumer Sentiment from the University of Michigan. On the Mexican front, the docket will feature Industrial Production.

From a technical standpoint, the USD/MXN rally stalled at around 17.5000/7000. However, buyers reclaimed the critical May 17 daily lof of 17.4038, keeping buyers hopeful of lifting the exchange rate towards the 18.0000 psychological barrier. A tick above that level sits the 200-day Moving Average (DMA) at 18.0112, which, once cleared, would put into play key resistance areas at 18.4010 and 18.6074, the April 5 high and the March 24 swing high, respectively.

Technical Levels: Supports and Resistances

USDMXN currently trading at 17.6018 at the time of writing. Pair opened at 17.5962 and is trading with a change of 0.03 % .

The pair is trading above its 20 Daily moving average @ 17.0519, above its 50 Daily moving average @ 16.9986 , above its 100 Daily moving average @ 17.2812 and below its 200 Daily moving average @ 18.0286

The previous day high was 17.7094 while the previous day low was 17.4216. The daily 38.2% Fib levels comes at 17.5995, expected to provide resistance. Similarly, the daily 61.8% fib level is at 17.5316, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 17.4421, 17.288, 17.1544
• Pivot resistance is noted at 17.7299, 17.8635, 18.0176

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