USD/MXN drops to 19.20, the lowest since mid-October
- Mexican peso continues to rise against US Dollar, stands at the highest since mid-October.
- Greenback weakens further after Fed official’s comments and following FOMC minutes.
- Mexico: inflation rises but less than expected.
The USD/MXN pair dropped for the fourth-day in-a-row on Wednesday weakened by a decline of the US dollar. The pair dropped to 19.19, the lowest since October 16.
The US dollar accelerated the slide in the market after Fed’s officials sounded more dovish about the outlook for monetary policy. The minutes of the last meeting confirmed the change in the tone of many members. “The FOMC minutes overall suggested that Fed officials were starting to become more cautious on the outlook and path for policy at the December meeting, suggesting that Powell's press conference ended up being more hawkish than the consensus view on the FOMC”, wrote TDS analysts.
The USD/MXN remains in a consolidation range slightly above 19.20 following the minutes, on its way to the lowest close in 11 weeks. The trend and technical indicators continue to point to the downside. A strong support is seen between 19.15 and 19.20, a break lower would expose the 19.00 zone. To the upside, resistance levels are now seen at 19.30, followed by 19.45 and 19.55.
Mexico: inflation rebounds, holds above target
Data released today showed that the Consumer Price Index in Mexico reached 4.83% in December up from the 4.72% reading in November. The CPI rose 0.47% during the month, slightly below expectations.
Despite showing a reading below the 4.89% of market consensus, inflation rebounded and remains above the central bank’s 3% target. Banxico rose the key rate to the highest level in ten years in order to lower inflation and to keep inflation expectations anchored.