- USD/MXN plunges below 17.0000 as softer US inflation data reduces expectations of further rate hikes, while upbeat Industrial Production in Mexico boosts MXN.
- US CPI report shows inflation decelerating faster than expected, easing pressure on the Fed for aggressive tightening.
- Minnesota and Richmond Fed Presidents express concerns about high inflation and stress the need to combat it through rate increases.
USD/MXN plummets below the 17.0000 figure as a softer-than-expected inflation report in the United States (US) has traders paring bets of further rate hikes. Also, upbeat Industrial Production (IP) data in Mexico was cheered by Mexican Peso (MXN) bulls. The USD/MXN is trading at multi-year lows, exchanging hands at 16.8386 after printing a daily high of 17.0632, with more than 1% losses.
Unexpectedly low CPI figures in the US alleviate pressures for aggressive tightening of monetary policy
The US Department of Labor (DoL) showed inflation is decelerating at a higher pace, as the June Consumer Price Index (CPI) report revealed. CPI came at 3.0%, below estimates of 3.1%. Excluding volatile items like food and energy, the so-called core CPI rose by 4.8% YoY, beneath forecasts of 5.0%, and lower than May’s 5.3%. Data eases pressure on the US Federal Reserve (Fed) to continue tightening monetary policy aggressively, as most speakers throughout the week stressed the need for two rate increases. Nevertheless, traders pared November’s meeting chances for a quarter of a percentage rate hike, with odds dropping from 38.2% to 25% after the CPI report, as shown by the CME FedWatch Tool.
The central bank bonanza continued with Minnesota and Richmond’s Fed Presidents Neil Kashkari and Thomas Barkin crossing the wires. Thomas Barkin said that inflation is too high and emphasized he’s comfortable doing more to tackle inflation, while Kashkari noted that the inflation fight must be won and that if inflation gets higher, rates must be raised further.
The greenback plunges across the board, with the US Dollar Index down 0.94%, at 100.703, at its lowest level since April 2022, weighed by falling US Treasury bond yields, which are nosediving.
On the Mexican front, Industrial Production rose 1% in May from April. It was above estimates of a 1.9% expansion on yearly figures. It came at 3.9%, flashing a robust economy benefiting from a possible nearshoring, which has failed to gain more pace, as investors eye the 2024 general election.
USD/MXN Price Analysis: Technical outlook
From a technical perspective, the USD/MXN is set to continue to weaken as price action continues to show the Mexican Peso (MXN) strength, with traders eyeing the October 2015 swing low of 16.3267. Still, speculators will face solid support at 16.5000. Although the Relative Strength Index (RSI) shows the indicator approaching oversold conditions, it still warrants further USD/MXN downside. Contrarily, if USD/MXN buyers enter the market, they must reclaim the 17.0000 mark to have the opportunity to shift the pair’s bias to neutral.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
![EUR/USD holds near 1.1100, looks to post small weekly gains](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/money-9377516_XtraSmall.jpg)
EUR/USD holds near 1.1100, looks to post small weekly gains
EUR/USD trades near 1.1100 in the American session on Friday. Although the risk-averse market atmosphere caps the pair's upside, dovish comments from Fed officials and the disappointing US jobs report help it hold its ground.
![GBP/USD retreats to 1.3150 area after post-NFP spike](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-1178148633_XtraSmall.jpg)
GBP/USD retreats to 1.3150 area after post-NFP spike
GBP/USD turns south and declines to 1.3150 area after spiking to 1.3240 in the early American session. The negative shift seen in risk mood following the US labor market data for August helps the US Dollar stay resilient against its peers and weighs on the pair.
![Gold pulls away from near record highs, holds above $2,500](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/Gold_Bar_XAU_Precious_Metal_XtraSmall.jpg)
Gold pulls away from near record highs, holds above $2,500
Gold came within a touching distance of a new all-time high near $2,530 as US Treasury bond yields turned south on disappointing US jobs data. The US Dollar's resilience amid a souring risk mood, however, caused XAU/USD to erase its daily gains.
![Crypto today: Bitcoin, Ethereum, XRP tests key support, TRON network non-stablecoin activity hits new highs](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/bitcoins-37949586_XtraSmall.jpg)
Crypto today: Bitcoin, Ethereum, XRP tests key support, TRON network non-stablecoin activity hits new highs
Bitcoin, Ethereum, and XRP hover around key support levels after registering a steep correction earlier this week. TRON network’s stablecoin activity hit new highs following the release of SunPump.
![Nonfarm Payrolls expected to show modest hiring rebound in August after July’s tepid report](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/us-job-hunter-8793311_XtraSmall.jpg)
Nonfarm Payrolls expected to show modest hiring rebound in August after July’s tepid report
The Nonfarm Payrolls report is forecast to show that the US economy added 160,000 jobs in August, after creating 114,000 in July. The Unemployment Rate is likely to dip to 4.2% in the same period from July’s 4.3% reading.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.