The US dollar to Mexican peso exchange rate, with a value of 17.5433, experiences an increase in strength as a result of encouraging economic information from the United States that was published on Tuesday.

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• USD/MXN strengthens due to upbeat US economic data released on Tuesday.

The pair currently trades last at 17.5433.

The previous day high was 17.5675 while the previous day low was 17.3642. The daily 38.2% Fib levels comes at 17.4898, expected to provide support. Similarly, the daily 61.8% fib level is at 17.4419, expected to provide support.

USD/MXN attempts to extend gains on the third successive day, trading higher around 17.5580 during the Asian session on Wednesday. The pair experiences upward support due to the risk aversion and improved US Treasury yields.

Additionally, stronger economic data from the United States (US) bolsters the prevailing strength of the US Dollar (USD).

US Consumer Confidence released on Tuesday for September rose to 103.0 lower than the reading of 108.7 in August. While Building Permits improved to 1.541M in August from 1.443M prior.

Moreover, the House Price Index month-month for July climbed to 0.8% compared to the market expectations of 0.5% from the previous rate of 0.4%.

Additionally, the Federal Reserve (Fed) is expected to raise policy rates through the end of the year as the US economy demonstrates resilience. This, in turn, boosts the US Treasury yields, which reinforces the strength of the US Dollar (USD).

The US Dollar Index (DXY) hovers around 106.30 by the press time, the highest level since December. The yield on the 10-year US Treasury note hovers below the highest level since October 2007, trading around 4.51% at the time of writing.

Furthermore, traders await the US Durable Goods Orders report to be released on Wednesday. Core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred measure of consumer inflation, is due on Friday. The annual rate is anticipated to reduce from 4.2% to 3.9%.

On Tuesday, Minnesota Fed President Neel Kashkari expressed the view that another rate hike is necessary, followed by the need to maintain rates at that level. He also mentioned the possibility of achieving a soft landing for the economy, which implies a gradual slowdown without causing a recession.

Recently, various Federal Reserve officials have offered differing perspectives on monetary policy. Some have advocated for patience, while others, such as Fed Governor Bowman, have emphasized the need for another interest rate hike.

Considering the latest “dot plots” presented in the September Summary of Economic Projections (SEP), it appears that the Fed is projecting a 25 basis point (bps) rate hike toward the end of the year. Furthermore, the Fed anticipates keeping rates above the 5% threshold throughout the following year.

On the other side, the recent data from Mexico showed that 12-month Inflation for August increased by 4.64% compared to the previous rate of 4.79%, surpassing the expected 4.61% rate. While Headline Inflation rose by 0.55%, higher than the expected 0.52% and 0.48%.

Mexico’s President, Andres Manuel Lopez Obrador, recently commented that the Bank of Mexico (Banxico) has been performing well as inflation rates decrease. However, Obrador also suggested that the central bank should place greater emphasis on promoting economic development.

If the rate of inflation continues to ease, Banxico may consider adjusting its monetary policy. Such adjustments could have an impact on the Mexican Peso.

The USD/MXN pair is dependent on the Greenback’s dynamics due to the lack of economic data. However, traders will likely monitor the Balance of Trade, Unemployment Rate, and the Bank of Mexico (Banxico) interest rate decision later in the week.

Technical Levels: Supports and Resistances

USDMXN currently trading at 17.5579 at the time of writing. Pair opened at 17.5435 and is trading with a change of 0.08 % .

The pair is trading above its 20 Daily moving average @ 17.2387, above its 50 Daily moving average @ 17.0675 , above its 100 Daily moving average @ 17.1893 and below its 200 Daily moving average @ 17.8688

The previous day high was 17.5675 while the previous day low was 17.3642. The daily 38.2% Fib levels comes at 17.4898, expected to provide support. Similarly, the daily 61.8% fib level is at 17.4419, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 17.416, 17.2885, 17.2128
• Pivot resistance is noted at 17.6192, 17.695, 17.8225

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