US Dollar vs Mexican Peso: USD/MXN Gears Up for Next Move as FOMC Meeting Looms
US Dollar vs. Mexican Peso (USD/MXN) Price, Analysis and Chart:
- USD/MXN will be steered by the latest FOMC update.
- Short-term support may come under pressure again.
USD/MXN Remains Supported For Now
The multi-week USD/MXN sell-off has stalled in the last few days with a series of lower lows and lower highs under pressure. The sell-off has been predicated by US dollar weakness and slight return to favor of EM currencies as an asset class, while the Mexican Peso continues to benefit from a positive interest rate differential against the US dollar. Today’s FOMC meeting and chair Jerome Powell’s post-release commentary are expected to be the driver of the next move in USD/MXN, especially if Powell arrests the greenback’s decline. At the April meeting Powell’s tone was gloomy, noting that the US economy was in a very bad place and that the Fed remained ready to do whatever was needed. Today’s meeting may see a slightly less pessimistic outlook, especially after last Friday’s NFP report.
The daily chart shows that USD/MXN has produced a short-term bottom just below 21.50 and this support needs to be watched closely. If the USD sell-off continues, the next level of technical support comes off the 61.8% Fib retracement at 21.296 before the 200-dma comes into play at 20.84. A stronger USD would see a group of recent highs between 21.94 and 22.00 come under pressure before resistance off the 50% Fib at 22.153. The pair have just moved out of oversold territory and the ATR shows declining volatility after the mid-March to mid-April peak.
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USD/MXN Daily Price Chart (December 2019 – June 10, 2020)
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