The USDMXN currency pair is facing difficulties in determining its next move as it awaits important data that could provide clarity on its future direction.

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• USD/MXN struggles for clear directions ahead of key data.

The pair currently trades last at 16.7435.

The previous day high was 16.8036 while the previous day low was 16.7269. The daily 38.2% Fib levels comes at 16.7562, expected to provide resistance. Similarly, the daily 61.8% fib level is at 16.7743, expected to provide resistance.

USD/MXN remains sidelined on the day, as well as on a weekly basis, as it seesaws around 16.72 amid early Thursday, after witnessing downbeat performance the previous day and the last week.

That said, the Mexican Peso (MXN) pair’s latest inaction could be linked to the mixed data from Mexico, as well as the cautious mood ahead of the Fed’s preferred inflation gauge, namely the US Core Personal Consumption Expenditure (PCE) Price Index for August.

Also read: US Dollar Index: DXY drops to 103.00 on Fed policy concerns, US PCE Inflation in focus

Earlier in the week, Mexico’s second quarter (Q2) Gross Domestic Product (GDP) growth eased to 0.8% QoQ versus 0.9% expected and 1.0% prior. However, the nation’s Fiscal Balance in Pesos improved to -77.562B in July from -258.05B in previous readings.

On the other hand, the downside prints of the US statistics bolstered the call of the Federal Reserve’s (Fed) policy pivot and weighed on the US Dollar, as well as the Treasury bond yields. That said, the second readings of the US second quarter (Q2) Gross Domestic Product (GDP) Annualized declined to 2.1% from 2.4% initial forecasts while the GDP Price Index also eased to 2.0% versus the first readings of 2.2%. Further, the preliminary readings of the Personal Consumption Expenditures (PCE) Prices also edged lower to 2.5% from 2.6% prior estimations for the said period. More importantly, the ADP Employment Change dropped to 177K compared to 195K market forecasts and 371K previous readings (revised from 324K).

Earlier in the week, the US consumer sentiment and activity data, as well as the housing market numbers, favored dovish calls about the US central bank and weighed on the US Dollar, as well as the USD/MXN price.

It should be noted that the market’s optimism also weighs on the USD/MXN prices amid hopes of an end to the higher rates. While portraying the mood, the US Dollar Index (DXY) dropped for three consecutive days to the lowest level in two weeks, making rounds to 103.15-10 of late. That said, the benchmark US 10-year Treasury bond yields remain pressured at the lowest levels in three weeks, around 4.11% by the press time whereas the S&P 500 Futures remain indecisive by the press time.

Looking ahead, the US Core PCE Price Index for August, expected to remain unchanged at 0.2% MoM but edge higher to 4.2% YoY from 4.1% prior, will direct the USD/MXN pair moves.

A one-month-old symmetrical triangle restricts USD/MXN moves between 16.70 and 16.85.

Technical Levels: Supports and Resistances

USDMXN currently trading at 16.7477 at the time of writing. Pair opened at 16.7419 and is trading with a change of 0.03% % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 16.9965, 50 SMA 16.9766, 100 SMA @ 17.3237 and 200 SMA @ 18.0877.

The previous day high was 16.8036 while the previous day low was 16.7269. The daily 38.2% Fib levels comes at 16.7562, expected to provide resistance. Similarly, the daily 61.8% fib level is at 16.7743, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 16.7114, 16.6808, 16.6347
• Pivot resistance is noted at 16.788, 16.8341, 16.8646

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