USD/MXN holds lower ground near multi-month low of $18.33, Fed Minutes, Mexican GDP eyed

• USD/MXN takes offers to refresh intraday low, mildly offered near the lowest levels since April 2018.
• US Dollar retreat adds strength to the bearish bias amid sluggish session.
• Risk-off mood, downbeat Oil prices put a floor under the Mexican Peso price.
• FOMC Meeting Minutes, Mexican Q4 GDP eyed for fresh impulse.

USD/MXN remains pressured around the lowest level in nearly five years as it drops to $18.33 during early Monday, keeping Friday’s fall to the multi-day bottom during a three-day downtrend.

In doing so, the Mexican Peso (MXN) pair cheers the retreat in the US Dollar amid a light calendar and the US holidays. Adding strength to the lackluster moves could be the cautious mood ahead of this week’s top-tier data from the US and Mexico, as well as mixed headlines surrounding the geopolitical risks emanating from Russia, China and North Korea.

Market sentiment dwindles as the Federal Reserve (Fed) hawks take a breather ahead of Wednesday’s Federal Open Market Committee (FOMC) Meeting Minutes. Also, Japan’s calling of the United Nations (UN) Security Council meeting to address the threats issued by North Korea joins the recent tension between the US and China over Taiwan seems to weigh on the risk profile and put a floor under the US Dollar.

On the other hand, an absence of US and Canadian traders allows the bond bears to take a breather and hence trigger the USD/MXN weakness.

It’s worth noting that Banxico’s surprise 0.50% rate hike propelled the USD/MXN moves earlier in February. However, the USD/MXN traders will look for this week’s fourth quarter (Q4) Mexican Gross Domestic Product (GDP) data, up for publishing on Friday, for clear directions. Should the Mexican economy marks welcome growth figures, the odds of witnessing the pair’s slump towards $18.00 can’t be ruled out.

Also important to note is that the Mexican economy relies on Oil exports and the hopes of higher economic recovery in China keep energy buyers hopeful, which in turn weighs on the USD/MXN prices.

Elsewhere, better-than-forecast prints of the US Consumer Price Index (CPI) and Retail Sales followed the previously flashed upbeat readings of employment and output data and propelled the US Treasury bond yields, as well as the US Dollar. On the same line could be the hawkish Federal Reserve (Fed) comments and the risk-negative catalysts mentioned above. However, the Fed’s pivot discussions aren’t off the table, which in turn highlights Wednesday’s Fed Minutes for clear directions.

Technical analysis

Unless providing a daily close beyond a 6.5-month-old descending resistance line, around $18.45 by the press time, USD/MXN buyers remain off the table.