Skip to content USDMXN Analysis – 4-October-2024
The Mexican peso has notably increased, surpassing the 19.2 per USD mark. This recovery is a turnaround from its recent two-week low of 19.069 on September 27.
The shift came after newly inaugurated President Claudia Sheinbaum delivered a promising speech, and Banxico’s deputy governor’s hawkish stance resonated with investors.
Sheinbaum’s assurances about the stability and security of foreign investments were crucial, suggesting her administration will continue previous policies favorable to investors.
Banxico’s Cautious Optimism Amid Inflation Concerns
Jonathan Heath, Banxico’s Deputy Governor, recently made a statement sharing insights into the country’s economic health. He mentioned that the core inflation rate is on target with the monetary authority’s expectations.
However, he expressed concern over the ongoing inflation in services, which could delay any planned reductions in interest rates. This cautious approach indicates that while some economic indicators are stable, there’s an undercurrent of inflationary pressures that need careful management.
Economic Challenges Loom Large
Despite these positive signs, the economic landscape in Mexico faces several challenges. Calls for Banxico to reduce borrowing costs have grown louder as business confidence and manufacturing activity have plummeted to multi-year lows.
In September, the manufacturing business confidence index fell to 51.9, its lowest since January 2023. Moreover, the manufacturing PMI has declined to 47.3, marking the weakest performance since January 2022. These indicators highlight the fragile nature of the current economic recovery and the need for strategic policy interventions.
USDMXN Analysis – 4-October-2024
FxNews—The USD/MXN currency pair bounced from the 19.065 mark, testing the 19.235 resistance as of this writing. The price of the trading security is below the Kernel Regression Channel. Meanwhile, the Awesome oscillator histogram is red and below the signal line.
The technical indicators suggest the primary trend is bearish and should resume.
From a technical standpoint, the immediate resistance is at 19.235. If the bears maintain the USD/MXN price below this level, the downtrend remains bearish. If this scenario unfolds, the currency pair’s cost can potentially target the 19.065 resistance again.
Conversely, if the USD/MXN price flips above the 19.065 resistance, the current uptick momentum can target the 61.8% Fibonacci retracement level at 19.357.
About The Author
Comments are closed.