Usdmxn Trades With Bearish Bias

Usdmxn Trades With Bearish Bias by Adam Rosen last updated on February 04, 2024

USD/MXN Trades Near 17.10 With Bearish Bias

It appears that there's no end to the losing streak of USD/MXN as the cross lost more ground to the Bears. For now, USD/MXN is trading near the 17.1300 level, which was the low made on Thursday's session.

The recent downside pressure in the USD/MXN is due to the weak CPI data, which allowed the MXN to gain the upper hand. As per the US CPI data, the core inflation is stable, while the overall inflation is also showing signs of moderation.

For the most part, the US CPI was near 4.3%, which is in line with the forecasts. But the CPI YoY took the markets by surprise with a reading of 3.7%. This was higher than the 3.2% reading of last year and also surpassed the 3.6% expectations set by the market.

5.25% Chance Of September's Rate Hike

Despite the surprise in the CPI, the forecast for the US Federal Reserve remains unchanged as no interest rate hike is expected. For now, the chances of a September rate hike are between 5.25 - 5.50%.

However, the interest rate hike during November is still around 40%, which might provide a much-needed push to the US Dollar.

And if we look at the DXY, it appears to be reversing from its high made a day earlier. At the time of writing this, the DXY was trading near 104.70 and was printing red bars.

On Wednesday, the DXY surged higher along with the US bond yields, but it also eventually came to an end. If we look at the 10-year bond yields in the USA, it is around 4.23%.

For now, the markets are looking forward to the US PPI and August's retail sales data. These economic indicators will provide an overview of the US economic activities.

Based on whether the data paints a healthy picture of the US economy or not, the USD/MXN pair will also determine its next direction.