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USDMXN At Monthly Highs After Banxico Rate cut

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Nikolas Papas Forex Analyst
    Summary:
  • USDMXN At Monthly Highs After Banxico Rate cut USDMXN trades at monthly highs after the central bank of Mexico yesterday cut the interest rates for one more

USDMXN trades at monthly highs after the central bank of Mexico yesterday cut the interest rates for one more time. Banxico cut the interest rates by 50 basis point as was widely expected by, and we discussed in our USDMXN analysis yesterday: USDMXN: Banxico Preview. Now the interest rates in Mexico stand at 5% the lowest level since November 2016. 

Banxico noted that the contraction of global economic activity intensified during the second quarter; however, in May, specific economic indicators for various economies showed some improvement. The economic output in Mexico dropped sharply in the first quarter and intensified in April, but they expect a recovery in May and June after the gradual reopening of the economy. 

The inflation in Mexico rose to 3.17% from 2.15%, and the bank expects that the inflation will stay close to its target 3%. 

On the economic data front from the USA, the Michigan Consumer Sentiment Index came in at 78.1 below the expectations of 79 in June. The Personal Spending rose by 8.2% in May below the expectations of +9%. The Personal Income came in at -4.2% topping the expectations of -6% in May. The Core Personal Consumption Expenditure Price Index came in at 0.1% also above the forecasts of 0%. 

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USDMXN Price Daily Analysis

USDMXN is 1.18% higher at 22.9268, making fresh one month highs as the pair during the correction from the recent highs found support at the 100-day moving average. Bulls are in control in the short term but need a credible break above the 50-day moving average to begin another leg higher. 

On the upside, the immediate resistance for the USDMXN stands at 23.0766 the daily top. A move above might push the price to 23.1474 the 50-day moving average. In case the pair breaks above 23.1474, then the next resistance will be met at 23.7694 the high from May 20.  

On the other hand, the initial support for the USDMXN pair will be met at 22,6514 today’s low. The next support zone for the pair stands at 22.4376 the 100-day moving average. The next target on the downside for the sellers is at 21.9052 the low from June 16. 

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