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FOREX: USDMXN Rises 1% as US/Mexican Officials Discuss Trade

FOREX
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  • The USD index is firming for a second consecutive session, with the likes of EUR and GBP underperforming in G10. Comments from President Trump on Zelensky have weighed on EURUSD, reflective of the souring sentiment towards how the potential Russia/Ukraine negotiations might progress.
  • EURUSD continues to press towards 1.0400, placing weight on EURJPY (0.65%), which continues to hover near session lows as we approach the European close.
  • Overall, EURJPY has pulled back from its recent high, and resistance at 160.68, the 50-day EMA, remains intact. A stronger reversal south would refocus the attention on 155.61, the Feb 10 low and a bear trigger. Furthermore, a trendline drawn from the August 2022 lows currently intersects just above this level, bolstering the significance of this area of support.
  • UK inflation rose at the fastest pace in almost a year in January, outpacing even the Bank of England's expectation for a move higher. However, the small downside surprise in services inflation provided a cloudy signal for GBP, which has been dominated by broader dollar sentiment. As such, GBPUSD has slipped back below 1.2600, but overall is holding onto its recent gains.
  • ZAR weakness was notable in EM amid the adjournment of the budget delivery, prompting a firm rally for USDZAR (+0.91%). This has weighed on the EM basket on Wednesday, with similar weakness being noted for the Mexican peso.
  • USDMXN has risen a little over one percent on the session, to trade around 20.45 at typing. Key support at 20.1343 remains intact and the currency will remain particularly sensitive to developments in Washington, where US and Mexican officials are discussing the future trade relationship.
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  • The USD index is firming for a second consecutive session, with the likes of EUR and GBP underperforming in G10. Comments from President Trump on Zelensky have weighed on EURUSD, reflective of the souring sentiment towards how the potential Russia/Ukraine negotiations might progress.
  • EURUSD continues to press towards 1.0400, placing weight on EURJPY (0.65%), which continues to hover near session lows as we approach the European close.
  • Overall, EURJPY has pulled back from its recent high, and resistance at 160.68, the 50-day EMA, remains intact. A stronger reversal south would refocus the attention on 155.61, the Feb 10 low and a bear trigger. Furthermore, a trendline drawn from the August 2022 lows currently intersects just above this level, bolstering the significance of this area of support.
  • UK inflation rose at the fastest pace in almost a year in January, outpacing even the Bank of England's expectation for a move higher. However, the small downside surprise in services inflation provided a cloudy signal for GBP, which has been dominated by broader dollar sentiment. As such, GBPUSD has slipped back below 1.2600, but overall is holding onto its recent gains.
  • ZAR weakness was notable in EM amid the adjournment of the budget delivery, prompting a firm rally for USDZAR (+0.91%). This has weighed on the EM basket on Wednesday, with similar weakness being noted for the Mexican peso.
  • USDMXN has risen a little over one percent on the session, to trade around 20.45 at typing. Key support at 20.1343 remains intact and the currency will remain particularly sensitive to developments in Washington, where US and Mexican officials are discussing the future trade relationship.