USD/MXN rebounds above 18.40 from fresh multi-year lows
|- Mexican peso loses momentum versus US Dollar after hitting fresh multi-year highs.
- Dollar advances as Wall Street trims gains.
- Inflations eases modestly in Mexico, Banxico’s minutes point to a smaller rate hike.
The USD/MXN is trading at daily highs at 18.42, up for the day. Earlier, it bottomed at 18.30, the lowest level since April 2018. The rebound took place amid a stronger US Dollar across the board and amid a bearish reversal in US stock markets.
The greenback strengthened following US economic data that included a new revision of Q4 GDP, a decline in jobless claims and a rebound in the Chicago Activity Index.
The USD/MXN is rebounding after testing levels under 18.30. The mentioned level is critical and a consolidation below would point to further weakness. If the current correction extends, it would face resistance at the 18.50 area. A recovery above would add support for an extension toward 18.68.
Inflation decelerates slowly in Mexico, Banxico to slow down
The Bank of Mexico released the minutes from its latest Board meeting held on February 9. They surprised the market with a 50 basis points rate hike against expectations of a 25 bps hike. The minutes showed board members considered rate hikes could rise more moderately at the next meeting due on March 30.
The end of the rate hike cycle looks near but inflation is still far from Banxico’s 3% target. Data released on Thursday showed inflation decelerated more than expected during the first half of February. The annual rate dropped from 7.94% to 7.76%, while the core index reached 8.38%.
USD/MXN daily chart
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