USD/MXN Extends Its Decline For 5th Consecutive Day
It's the 5th day in a row that the USD/MXN continues to decline without any end in sight. Especially after the release of the US PMI data, the speed of decline increased as the ground situation became a little more difficult for the Fed.
According to experts, the recent data may prevent the Fed from completely carrying out its interest rate plan as the business activity in the country is deteriorating. Based on all of these, the USD/MXN turned lower and was last seen near 16.82260, with a decline of 0.48% for the day.
Earlier, the USD/MXN had touched 16.9151 (daily high), only to turn lower after the US PMI data. So, in the near term, the MXN has the upper hand, while the USD appears to be struggling.
US PMI Data Shows Contraction
The PMI data released by the S&P Global suggests that not everything is alright with the US economy. The PMI for the manufacturing + services reached 50.4 while it was near 52 last month. The recent reading is an indication that we are officially in the contraction territory, which is not a good sign for the US economy.
Similarly, the New Home Sales data tells us that the health of the housing market came out to be 4.4% MoM. Although the data was positive, it was overshadowed by the PMI as that holds more significance.
This economic backdrop suggests that the short to medium-term direction for the USD/MXN is bearish. In fact, it wouldn't be wrong to say that the USD/MXN will likely touch its yearly lows (2023). The YTD (2023) low of the USD/MXN is present at 16.62, which is just a little lower than the recent trading price.
If the YTD low of the USD/MXN is reached, the next target will be the 16.3267 level, which is the low from October 2015. On the other hand, the upward momentum in the USD/MXN will push it towards 17.00, where the 20 & 50 SMA are present on the daily chart.