#USDMXN @ 17.1205 Mexican Peso recovers as weak US data sparks a sell-off, bringing down from a four-week high.

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• Mexican Peso recovers as weak US data sparks a sell-off, bringing USD/MXN down from a four-week high.

The pair currently trades last at 17.1205.

The previous day high was 17.382 while the previous day low was 16.999. The daily 38.2% Fib levels comes at 17.2357, expected to provide resistance. Similarly, the daily 61.8% fib level is at 17.1453, expected to provide resistance.

The Mexican Peso (MXN) recovered some ground on Friday as soft data on the United States (US) triggered a US Dollar (USD) sell-off. Hence the USD/MXN dropped from four-week highs, trading at 17.1388, down 0.55%.

The US Department of Labor revealed that June’s Nonfarm Payrolls figures for June showed that the economy added 209K jobs, beneath forecasts of 225K, triggering US Dollar weakness across the board. The Unemployment Rate portrayed a tight labor market, with June figures coming at 3.6% vs. 3.7%, while Average Hourly Earning (AHE) expanded 4.4% YoY, above the prior’s month 4.2%, adding to inflationary pressures, keeping the US Federal Reserve (Fed) under pressure.

Following the data, the USD/MXN continued its downtrend, falling from 17.30 to 17.11. Meanwhile, the US 10-year Treasury note yields 4.058%, falls one and a half basis points, while the US Dollar Index (DXY), a gauge of the buck’s value against a basket of six currencies, dives to 102.279, losses 0.81% after staying above the 103.000 during the past four days.

Across the border, the Mexican economic docker revealed June’s inflation fell for the fifth straight month to 5.06%, as shown by INEGI. Consumer prices dropped 0.10% in June from May, exceeding estimates of -0.09%. Annual core CPI which strips volatile items, was 6.89% in June, above forecasts of 6.87%.

Regarding expectations for the US Federal Reserve (Fed) July monetary policy, the CME FedWatch Tool shows odds standing at 92.4%, higher than last week’s 86.8%; nonetheless, investors are not estimating additional hikes, even though the Fed’s dot-plot shows the Federal Funds Rate (FFR) peaking at 5.6%.

Given the fundamental backdrop, the USD/MXN would likely continue to edge down as the interest rate differential between Mexico (11.25%), and the US (5.125%) favors the Mexican Peso (MXN). The USD/MXN could be re-testing the 17.0000 figure, but some support levels must be surpassed on its way down. The USD/MXN’s first support level would be the 17.1000 mark, followed by the 17.0000 figure. Breach of the latter will expose the year-to-date (YTD) low at 16.9761.

Technical Levels: Supports and Resistances

USDMXN currently trading at 17.1422 at the time of writing. Pair opened at 17.2419 and is trading with a change of -0.58 % .

The pair is trading above its 20 Daily moving average @ 17.1391, below its 50 Daily moving average @ 17.4687 , below its 100 Daily moving average @ 17.8723 and below its 200 Daily moving average @ 18.6398

The previous day high was 17.382 while the previous day low was 16.999. The daily 38.2% Fib levels comes at 17.2357, expected to provide resistance. Similarly, the daily 61.8% fib level is at 17.1453, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 17.0333, 16.8247, 16.6503
• Pivot resistance is noted at 17.4163, 17.5906, 17.7992

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