USD/MXN extends its losing streak towards 17.00 amid a weaker US Dollar

• USD/MXN moves on a downward trajectory on a weaker US Dollar.
• Downbeat US Treasury yields contribute to weighing on the US Dollar.
• Traders await Swiss inflation data followed by the Banxico policy decision on Thursday.

USD/MXN continues its losing streak for the third successive day, trading lower around 17.03 during the European session on Wednesday. The US Dollar (USD) depreciates against the Mexican Peso (MXN) due to the decline in the US Treasury yields. That, in turn, acts as a headwind for the USD/MXN pair.

US Dollar Index (DXY) continues to lose ground, inching lower to near 104.10 with the 2-year and 10-year yields on US bond notes standing at 4.40% and 4.10%, respectively, by the press time. Nevertheless, the bearish momentum of the Greenback might have been limited by the hawkish remarks from US Federal Reserve (Fed) Chair Jerome Powell. Powell alleviated market expectations of a rate cut in March.

The Mexican Consumer Confidence data is set to be released on Wednesday by INEGI. Furthermore, inflation data is scheduled to get public on Wednesday followed by the Bank of Mexico’s (Banxico) interest rate decision, Core Inflation is expected to be eased to 0.37% in January against the 0.44% prior. However, Headline Inflation is expected to rise by 0.88%, exceeding the previous growth of 0.71%. 12-Month Inflation is anticipated to grow by 4.88%, higher than the 4.66%.

Banxico is anticipated to keep its interest rate steady at 11.25% at February’s policy meeting but a quarter-basis point rate cut is expected in March. Furthermore, markets anticipate a subsequent escalation in the scale of rate cuts by the Banxico throughout 2024.