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MEXICO: Peso Consolidating Renewed Weakness, Yet to Test Tuesday Lows

MEXICO
EM BulletMexicoBulletEmerging Market NewsNorth America
  • One could argue it is surprising that the Mexican peso is not weaker on Friday, amid softer-than-expected domestic growth data, expectations of imminent tariffs from the US and an impending 50bp cut from the central bank looks the likeliest of possibilities next week.
  • President Trump’s tariff comments late Thursday sparked a sharp rally for USDMXN from around 20.45 to 20.75, however, spot has failed to test the highs printed earlier in the week at 20.7833.
  • The ongoing recovery for major equity indices appears to be providing just enough short-term support for the peso, as well as earlier headlines from the Wall Street Journal indicating that President Trump’s advisers are considering several offramps to avoid enacting the universal tariffs on Mexico and Canada that he had pledged, according to people familiar with the matter.
  • The USDMXN trend structure remains bullish and recent short-term pullbacks appear corrective. The bull trigger remains at 20.9382, the Jan 17 high. A move through the resistance would resume the uptrend and expose the 21.00 handle initially, followed by 21.1093, the 2.618 projection of the Sep 18 - Oct 1 - 4 ‘24 price swing.
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  • One could argue it is surprising that the Mexican peso is not weaker on Friday, amid softer-than-expected domestic growth data, expectations of imminent tariffs from the US and an impending 50bp cut from the central bank looks the likeliest of possibilities next week.
  • President Trump’s tariff comments late Thursday sparked a sharp rally for USDMXN from around 20.45 to 20.75, however, spot has failed to test the highs printed earlier in the week at 20.7833.
  • The ongoing recovery for major equity indices appears to be providing just enough short-term support for the peso, as well as earlier headlines from the Wall Street Journal indicating that President Trump’s advisers are considering several offramps to avoid enacting the universal tariffs on Mexico and Canada that he had pledged, according to people familiar with the matter.
  • The USDMXN trend structure remains bullish and recent short-term pullbacks appear corrective. The bull trigger remains at 20.9382, the Jan 17 high. A move through the resistance would resume the uptrend and expose the 21.00 handle initially, followed by 21.1093, the 2.618 projection of the Sep 18 - Oct 1 - 4 ‘24 price swing.