Mexican Peso Outlook: USD/MXN May Swing Lower on Chance Banxico Holds Rates

Banxico Preview, USD/MXN Technicals – Talking Points

• Banxico date decision preview, USD/MXN technical outlook
• The Bank of Mexico is expected to cut its benchmark rate by 25 basis points
• Despite larger consensus, several economists expect no cut in rates

The Mexican Dollar is in focus as the Bank of Mexico is set to deliver an interest rate decision later today. The DailyFX Economic Calendar shows that Mexico’s central bank is expected to cut its benchmark interest rate by 25 basis points, from 4.25% to 4.00%. The Peso has shown remarkable strength against the greenback since the Covid pandemic initially caused a rush for US Dollars on global liquidity concerns. Since April, USD/MXN fell over 20%.

USD/MXN 30-Min Chart

Chart created with TradingView

Currently, USD/MXN price action is sitting just under 20.4549. Bearish momentum appears to be intact as the 20- and 50-day moving averages are both treading lower. Support levels to the downside seem lacking. Bulls could look to hold at a level from earlier this week when intraday price action pivoted higher from 20.0329.

To the upside, the key moving averages along with a support zone from the September-October time frame at 20.8377 would present as an obstacle to bulls. Still, there is plenty of open space to the downside with the February low nearly 10% under the current level.

USD/MXN Daily Chart

Chart created with TradingView

Written by Thomas Westwater, Analyst for DailyFX.com

Contact Thomas at @FxWestwater