The US dollar to Mexican peso exchange rate, with the symbol USDMXN, decreases by 0.71% from 17.4728 to 17.4624. This drop is driven by a weaker US Dollar Index, which falls by 0.49% to 104.530, even though US bond yields are increasing.

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• USD/MXN drops 0.71% to 17.4624, influenced by a softer US Dollar Index, which declines 0.49% to 104.530 despite rising US bond yields.

The pair currently trades last at 17.4728.

The previous day high was 17.6233 while the previous day low was 17.4395. The daily 38.2% Fib levels comes at 17.5097, expected to provide resistance. Similarly, the daily 61.8% fib level is at 17.5531, expected to provide resistance.

The Mexican Peso (MXN) took advantage of a softer US Dollar (USD) on Monday, ahead of the release of inflation figures in the United States (US). The exchange rate traveled as high as 17.5927 before retracing on investors seeking risk. That and Asian central banks propelling their local currencies weakened the USD. The USD/MXN is trading at 17.4624, down 0.71%.

Comments by the Bank of Japan (BoJ) Governor Kazuo Ueda prompted investors to close short positions on the Japanese Yen (JPY), spurring weakness on the Greenback. Also, China’s strict scrutiny on US Dollar buying by domestic companies was capped under $50 million, with purchases at or above that amount requiring approval by the People’s Bank of China (PBoC) central bank.

Consequently, the US Dollar Index (DXY), which measures the buck’s performance against a basket of peers, drops 0.49% and sits at 104.530, a headwind for the USD/MXN. This is despite the recent uptick in US bond yields, with the 10-year benchmark note rate gaining three basis points at 4.296%.

Meanwhile, data from Mexico showed that Industrial Production rose by 4.8% in July, a tick lower than the upward revised June figures at 4.9% YoY, while on a monthly basis, decelerated to 0.5% from 0.6% in June.

In other news, the Mexican Finance Ministry projects Mexico to grow between 2.5% and 3.5%, seen as optimistic by analysts. Sources quoted by El Financiero said the forecast is far from the 1.7% consensus and 1% above the Bank of Mexico (Banxico) 2.1% projection.

The economic package in Mexico for 2024 proposes an increase in the fiscal deficit from 3.3% to 4.9% of GDP in 2023, the largest negative balance in 36 years. An analyst cited by El Financiero said, “It is irresponsible to project a deficit, especially when the economy is growing.”

Aside from this, the US economic agenda is scarce on Monday, but it would gather pace on Wednesday with the release of the Consumer Price Index (CPI) for August. Data is expected to rise compared to July’s numbers, meaning the US Federal Reserve (Fed) would need to keep rates higher for longer. The consensus estimates the CPI to rise 3.6% YoY from 3.2% in July. Core CPI is foreseen to slow from 4.7% to 4.3%

After printing three consecutive sessions failing to crack above 17.8000, the USD/MXN is retreating toward the September 8 low of 17.4380, which could pave the way for further losses once broken. The 100-day Moving Average (DMA) at 17.2658 emerges as the next support, followed by the 20-DMA at 17.0967 and the 50-DMA at 17.0084. Conversely, if the pair stays above 17.4400, expect further consolidation within the 17.3912-17.7074 before fundamental news triggers a range break.

Technical Levels: Supports and Resistances

USDMXN currently trading at 17.4796 at the time of writing. Pair opened at 17.5912 and is trading with a change of -0.63 % .

The pair is trading above its 20 Daily moving average @ 17.0813, above its 50 Daily moving average @ 17.0081 , above its 100 Daily moving average @ 17.2772 and below its 200 Daily moving average @ 18.0197

The previous day high was 17.6233 while the previous day low was 17.4395. The daily 38.2% Fib levels comes at 17.5097, expected to provide resistance. Similarly, the daily 61.8% fib level is at 17.5531, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 17.4793, 17.3675, 17.2955
• Pivot resistance is noted at 17.6631, 17.7351, 17.847

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