USD/MXN Bears eye a break of key daily support
26.07.2023, 21:31

USD/MXN Bears eye a break of key daily support

  • USD/MXN bears are still in control as US Dollar weakness. 
  • A risk factor for the Peso remains developments in the US.

Currencies of most Latin American countries extended gains on Wednesday after a widely expected interest rate hike from the US Federal Reserve, with the Mexican Peso continuing its decline within the long-term bearish trend in USD/MXN.

Latam currencies have benefited from attractive yields this year given surging interest rates in the region. An important risk factor for the Mexican Peso remains developments in the US.

''If the US economy cools down more than expected, this would also weigh on the Mexican outlook. This would likely limit upside risks to inflation and could imply a sharper cut in Mexican interest rates and a correspondingly less attractive real interest rate outlook, which would weigh on the peso,'' analysts at Commerzbank explained. 

''In our baseline scenario, however, we expect solid domestic demand and Banxico's vigilance to continue to support the peso in the face of a still uncertain inflation outlook.''

USD/MXN charts

The weekly chart shows the price in decline below the fresh key structure.

 

On the daily chart, the correction could be running out of steam and reversion to the downside could be the cards. Bears eye a break of support for the forthcoming days. 

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