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  • Mexican peso unchanged against the US dollar, holds near monthly highs.  
  • USD/MXN continues to trade near the critical support of 18.90.  

The USD/MXN pair dropped during the American session to 18.90 hitting a fresh daily low and then bounced to the  upside. As of writing trades at 18.93, at the same level it closed on Friday.  

The US dollar posted mix results on Monday, on a quiet session across financial markets. Data from the US weakened the demand for the greenback.  Durable Goods Orders dropped unexpectedly in November while New Home Sales fell to an annual rate of 719K.  

Ahead of holidays, subdued market activity is likely to continue over the next days. Such a scenario should help USD/MXN remain in the current consolidation range between 18.90 and 19.00. A close below 18.90 should trigger more losses while above 19.00, the pair is likely to recover toward 19.10.  

Mexico: Inflation keeps falling

Data released today showed that in the first half of December the Consumer Price Index rose 0.35% and compared to a year ago 2.63%. It is the lowest reading for the first half month  inflation since 2015.  

Inflation data keeps the door open to more rate cuts from the Bank of Mexico. Last week, the central bank cut its key interest rate by 25bps to 7.25%. With the Mexican peso stronger and inflation still trending lower, analysts see more rate cuts. Inflation stands below Banxico’s target and economic activity remains weak.