Skip to content USDMXN Bullish Amid Mexican Inflation Falls
The Mexican peso has recently declined, crossing the 19.4 mark against the US dollar. This shift marks a departure from its two-week peak of 19.27, seen on October 4.
The movement comes as investors reflect on the latest domestic inflation figures while the US dollar strengthens.
Mexico Sees Lowest Core Inflation Since 2021
Mexico’s core annual inflation rate decreased in September, registering at 3.91%—the lowest since February 2021. This drop from August’s 4% and slightly under the anticipated 3.95% shows a mild easing in price pressures.
Additionally, the headline annual inflation rate decreased for the second month in a row, reaching 4.58%, below the expectations of 4.62% and the lowest since March.
Given the easing inflation, the Bank of Mexico might consider additional interest rate cuts following a recent decrease. Such a move could exert further pressure on the value of the Mexican peso.
Influence of the US Dollar
Concurrently, the US dollar has seen an upswing, driven by expectations of a less accommodating stance from the Federal Reserve and a rise in demand for safe-haven assets. This has also played a role in the peso’s recent decline, as the stronger dollar makes the peso less attractive by comparison.
USDMXN Analysis – 10-October-2024
The USD/MXN formed a long-wick candlestick pattern when the price peaked at the 19.636 resistance. Currently, the currency pair trades bullish above the %50 Fibonacci retracement level, the 19.472. If this level holds, the bullish trend will likely resume. In this scenario, the next target could be the 19.83, the October 1 high.
Conversely, if the USD/MXN bears push the price below the immediate resistance at 19.472, the 61.8% Fibonacci retracement level at 19.388 could be the next target.
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