March 07, 2023 15:22 GMT
Greenback Extends Gains Post-Powell, USDMXN Holds Key Support
- The greenback is extending gains following Fed Chair Powell’s remarks with latest headlines indicating that Fed swaps now pricing to favour a 50bp hike in March over 25bp.
- Not a big surprise that Powell envisages a higher potential terminal rate, but a significant and surprising development that Powell suggests they could re-accelerate to 50bp hikes.
- The higher USD and weaker equities providing a pessimistic backdrop for USD/LatAm FX and in particular, USDMXN (+0.65%) has led the charge higher. Key support at the 2018 lows of 17.9401 has held well and could be indicating a short-term base for the pair.
- Further strength for the pair will place the focus on the 20-day EMA, at 18.3872 and 18.50 as the first notable resistance points.