Mexican Peso starts the session lower as the US Dollar Index (DXY) remains steady around 103.24.

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• Mexican Peso starts the session lower as the US Dollar Index (DXY) remains steady around 103.24.
• Despite Wall Street gains, USD/MXN fails to rally sharply due to improved risk appetite and lower US Treasury bond yields.
• Mexico’s economic docket is eyed by traders, expecting the release of Economic Activity and inflation data.

The Mexican Peso begins the Monday session on a lower note against the US Dollar (USD) due to the Greenback capping its earlier losses as shown by the US Dollar Index (DXY), which is virtually unchanged near 103.24. Alongside that, an improvement in risk appetite and falling US Treasury bond yields have deterred the USD/MXN from gaining ground to higher levels with the pair trading at 17.13, up 0.35%.

Wall Street prints solid gains, which would usually bolster the Mexican currency. Nevertheless, the lack of economic data in Mexico’s docket on Monday and Tuesday leaves traders leaning on data from the United States. Mexico’s calendar will gain traction on Wednesday with the release of the Economic Activity report, along with January’s mid-month inflation data.

In the meantime, Federal Reserve (Fed) officials are absent as they enter their blackout period ahead of the January 30-31 monetary policy meeting.

The USD/MXN daily chart shows the pair is strengthening, testing the 50-day Simple Moving Average (SMA) at 17.15, ahead of a key resistance level at the 200-day SMA at 17.36. Further upside is seen once those levels are taken, followed by the 100-day SMA at 17.42 and 17.50. A breach of the latter will expose the May 23 high of 17.99.

On the flip side, if sellers cap the exotic pair from reclaiming the 50-day SMA, that would expose the pair to further losses. The first support would be the January 22 low of 17.05, the figure at 17.00, and the January 12 cycle low seen at 16.82.

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