#USDMXN @ 18.7930 pares Banxico-led losses ahead of US consumer-centric data. (Pivot Orderbook analysis)

…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for PREMIUM VERSION HERE to read full post below containing analysis. In case of any error or you think you are not able to read the full post below, please email us at support#nehcap.com [lwa][/s2If] [s2If current_user_can(access_s2member_level4)]

• USD/MXN pares Banxico-led losses ahead of US consumer-centric data.
• Banxico surprised markets with 0.50% rate hike versus 25 bps expected.
• Recession fears seem to underpin US Dollar rebound after Fed talks, US statistics weighed on the greenback.
• US Michigan Consumer Sentiment Index, inflation expectations eyed ahead of next week’s US CPI.

The pair currently trades last at 18.7930.

The previous day high was 18.9961 while the previous day low was 18.7356. The daily 38.2% Fib levels comes at 18.8351, expected to provide resistance. Similarly, the daily 61.8% fib level is at 18.8966, expected to provide resistance.

USD/MXN seesaws around 18.80 as it consolidates the weekly loss, as well as the daily fall, while heading into Friday’s European session. In doing so, the Mexican Peso (MXN) pair fades the Banxico-led moves as the US dollar picks up bids amid a cautious mood in the market.

The Mexican central bank, namely Banxico, surprised markets by announcing 50 basis points (bps) rate hike on Thursday. With this, Banxico surpassed market forecasts of a 0.25% rate lift while citing an effort to tame inflation fears with the increase of the benchmark rate to 11.0%.

On the other hand, the US Dollar suffered from the increase in the weekly initial jobless claims, as well as the downbeat comments from Richmond Federal Reserve (Fed) President Thomas Barkin. That said, the US Weekly Initial Jobless Claims rose to 196K versus 190K expected and 183K prior. “The advance number for seasonally adjusted insured unemployment during the week ending January 28 was 1,688,000, an increase of 38,000 from the previous week’s revised level,” said the US Department of Labor (DOL) showed on Thursday.

Elsewhere, Fed’s Barkin appeared too dovish while suggesting rate cuts as he said that it would make sense for the Fed to steer “more deliberately” from here due to lagged effects of policy. Previously, Fed Chair Jerome Powell hesitated in cheering the upbeat US jobs report and raised fears of no more hawkish moves from the US central bank.

While delving deeper into the recent moves, the widest negative difference between the US 10-year and 2-year Treasury bond yields since 1980 amplified the recession woes the previous day. The yield curve inversion remains around the same level as both these key bond yields stay inactive near 3.67% and 4.49% respectively by the press time. The same favor the market’s rush towards risk safety and underpins the US Dollar rebound. That said, the US Dollar Index (DXY) prints mild gains around 103.38 at the latest.

Moving on, the early signals for the next week’s US inflation data, namely preliminary readings of the US Michigan Consumer Sentiment Index and 5-year Consumer Inflation Expectations for February, will be crucial for immediate directions. Considering the upbeat expectations from the scheduled data, as well as the recession woes, the currency pair is likely to witness further recovery.

USD/MXN remains directed towards the multi-month low of 18.50, marked earlier in February, unless providing a daily closing beyond the 50-DMA hurdle surrounding $19.20.

Technical Levels: Supports and Resistances

USDMXN currently trading at 18.7976 at the time of writing. Pair opened at 18.7865 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 @ 18.828, 50 SMA 19.2235, 100 SMA @ 19.4914 and 200 SMA @ 19.8126.

The previous day high was 18.9961 while the previous day low was 18.7356. The daily 38.2% Fib levels comes at 18.8351, expected to provide resistance. Similarly, the daily 61.8% fib level is at 18.8966, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 18.6826, 18.5788, 18.4221
• Pivot resistance is noted at 18.9432, 19.0999, 19.2037

[/s2If]
Join Our Telegram Group