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USD/MXN corrects lower, a top in place?

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The Mexican peso rose on Friday against the US Dollar and extended the recovery after hitting 16-month lows last week. The tone around the peso improved on Monday.

USD/MXN reached last Friday at 20.96, the strongest since January. Afterward reversed sharply and dropped to 20.60. Today the pair approached 20.80 but turned to the downside. It broke a short-term uptrend line and fell to 20.50. You can see mexico vs canada online in a convert now

The pair was about to post the lowest close in a week. Short-term technical indicators are turning south signaling a potential temporal top around 21.00. The immediate support is located around the 20.50 area, a break lower could open the doors for a slide to 20.30.

Banxico, CPI and elections

In Mexico, the central bank will meet on Thursday, CPI data is due on Friday, while the presidential election campaign enters the final stage.

“We see risk of further MXN depreciation heading into the July 1st Presidential election regardless of rates and as such, we expect Banxico to keep its powder dry until after then”, wrote analysts at Rabobank. With a different perspective, analysts at Brown Brothers Harriman expect a rate hike of 25bp to 7.75%.

“Mexico reports mid-June CPI Friday, which is expected to rise 4.59% y/y vs. 4.46% in mid-May. If so, inflation would continue moving away from the 2-4% target range after several months of heading towards it”, added BBH economists.
Etiquetas: economía, mexican pesos Agregar / Editar Etiquetas