- The Mexican peso is among top performers on Monday, trades at 3-month highs against US dollar.
- USD/MXN testing the key support around 18.45/50: consolidation below targets 18.30.
The USD/MXN pair dropped to 18.45, hitting the lowest intraday level since April 20. As of writing it was hovering around 18.50. The slide so far has been moderated. The pair is testing a key support level: the 18.45/50 area. A break lower could open the doors to more losses.
The main trend continues to point to the downside, as it has been the case since mid-June. Last week the pair found support at 18.50 and then bounced to the upside and remained in a consolidation range between 18.50 and 18.75. Today is testing levels under the lower bound of the mentioned range.
The Mexican Economy Minister Ildefonso Guajardo mentioned today that NAFTA negotiation will continue during the week and he added that they made a proposal on rules of origin regarding cars. Negotiators from both countries expressed optimism lately about reaching soon an agreement.
Data ahead
“Mexico reports July CPI Thursday, which is expected to rise 4.79% y/y vs. 4.65% in June. The central bank delivered a dovish hold last week, signaling that it views the recent rise of inflation as temporary. We disagree and believe that Banxico will have to tilt more hawkish in the coming months. Next policy meeting is October 4. June IP will be reported Friday”, said analysts at BBH.
In the US, also inflation data will be released: the PPI on Thursday and the CPI on Friday.
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