USD/MXN finds support near 16.80, following footprints of USD Index

• USD/MXN has found a temporary cushion near 16.82 after coping action in the USD Index.
• US equities are in the grip of bulls but uncertainty could emerge as firms will start reporting second-quarter results.
• The US Dollar Index remained under pressure as inflationary pressures have softened beyond expectations.

The USD/MXN has found intermediate supported after correcting to near 16.82 in the early European session. The downside bias in the asset has not faded yet and for a sustained bullish reversal, the pair has to pass through various filters. The major has followed the footprints of the US Dollar Index (DXY), which has also made a recovery attempt around 99.55.

S&P500 futures are showing choppy moves in early London, portraying quiet market sentiment for now. The overall market mood is quite upbeat as investors are hoping for a skip in the rate-hiking regime by the Federal Reserve (Fed) consecutively.

US equities are in the grip of bulls but uncertainty could emerge as firms will start reporting second-quarter results starting with big banks. Earnings and guidance could be subdued due to aggressive policy-tightening by the Fed and tight credit conditions by commercial and regional banks.

The US Dollar Index remained under pressure as inflationary pressures have softened beyond expectations and are sufficient to support expectations of only one more interest rate hike this year. Meanwhile, United States labor market conditions are still tight as weekly initial jobless claims have dropped for the week ending July 07. The US Department of Labor reported that individuals claiming for the first time were 237K vs. expectations of 250K and the former release of 249K.

On the Mexican Peso front, INEGI reported that monthly Industrial Output (May) reported an expansion of 1.0% vs. expectations of a stagnant performance. On an annualized basis, economic data expanded by 3.9% against the consensus of 1.9% and the former release of 0.7%.