USD/MXN fades bounce off multi-month low near $18.50 amid dicey markets

• USD/MXN retreats from intraday high, fails to extend the previous week’s rebound from the lowest levels since April 2018.
• US Dollar struggles for clear directions after posting the heaviest run-up since September 2022 amid hawkish Fed concerns.
• Mixed risk catalysts, sluggish bond markets keep Mexican Peso illiquid ahead of US Durable Goods Orders.

USD/MXN aptly portrays the market’s inaction during early Monday as the Mexican Peso (MXN) pair seesaws around $18.40, after bouncing off the lowest levels in nearly five years.

In doing so, the USD/MXN pair seesaws around the intraday high as the US Dollar seeks the next catalyst to extend the previous week’s run-up. It should be noted that the upbeat US data, mainly surrounding inflation, joined hawkish Fed talks and upbeat Treasury bond yields to underpin the US Dollar’s biggest weekly run-up since September 2022 the last week. That said, the US Dollar Index (DXY) renews its intraday high around 105.30 following the initial pullback from a seven-week high. In doing so, the greenback’s gauge versus the six major currencies remains firmer for the fifth consecutive day.

Mixed concerns surrounding Russia and mildly offered Oil price seems to challenge the USD/MXN traders amid a light calendar ahead of the US Durable Goods Orders for January, expected -4.0% versus 5.6% prior.

Adding strength to the market’s inaction are the dicey US Treasury bond yields. While tracing the same, the US 10-year Treasury yields reverse the early-day losses to around 3.95%. Further, the two-year counterparts jump back towards the highest levels since November 2022, marked the previous day, as bond bears poke the 4.83% level by the press time.

Against this backdrop, t the S&P 500 Futures lick its wounds with mild gains after the Wall Street benchmark posted the biggest weekly slump of 2023.

At home, hawkish concerns after Banxico’s latest 0.50% rate hike keep the USD/MXN bears hopeful.

Moving on, US PMIs for February and second-tier data from Mexico will entertain USD/MXN traders amid an anticipated corrective bounce.

Technical analysis

Thursday’s Doji near multi-month low joins oversold RSI (14) to suggest corrective bounce in the USD/MXN prices. However, buyers remain off the table unless witnessing sustained trading beyond January’s low surrounding $18.56.