Keep an eye on USDMXN! Promising trading opportunities are on the horizon!
The USDMXN pair, representing the exchange rate between the US Dollar and the Mexican Peso, is a critical financial indicator reflecting each country’s economic health. The US Dollar is primarily influenced by Federal Reserve policies and economic data releases such as employment rates and GDP figures. In contrast, the Mexican Peso is sensitive to changes in domestic economic conditions, including trade balances and oil prices, due to Mexico’s significant role as an oil exporter.
ISM Services PMI, Aug 5, 16:00 (GMT+2)
The forthcoming ISM Services PMI is predicted to rise to 51, indicating expansion, from a prior reading of 48.8. If this prediction materializes and the PMI exceeds expectations, it would signal robust health in the US services sector, thereby boosting investor confidence in the US economy. This could strengthen the US Dollar against the Mexican Peso, potentially driving the USDMXN rate higher as the Dollar gains. Conversely, if the PMI result is lower than forecast, showing weaker-than-expected economic activity, this could undermine confidence in the US economy. Such a scenario would likely exert downward pressure on the Dollar, causing the USDMXN pair to decrease as the Dollar weakens relative to the Peso.
Mexico Interest Rate Decision, Aug 08, 21:00 (GMT+2)
The forecast for Mexico’s upcoming interest rate decision will hold steady at 11.00%.If the Banco de México decides to keep rates unchanged, it may subtly strengthen the Mexican Peso by signaling economic stability. Additionally, maintaining attractive yields on Peso-denominated assets could stabilize or slightly increase the Peso’s value against the Dollar. On the other hand, if the rate is unexpectedly raised, it would likely provide a more decisive boost to the Peso as higher rates offer greater returns on investments. Conversely, a surprise rate cut could weaken the Peso by reducing the attractiveness of Mexican assets, increasing the USDMXN rate as investors shift towards more favorable yields elsewhere.
The last time the Bank of Mexico changed the interest rate from 11.25% to 11.00% was on March 21, 2024, and the USDMXN rate went up!
In the Daily timeframe, USDMXN is consolidating near a vital resistance area after a short-term uptrend. The price has reached the upper Bollinger line, but the bullish sentiment is extremely strong.
If the price breaks the resistance at 18.7600, the target will be 19.830, corresponding to 161.8 Fibonacci;
A rebound from the resistance will drop USDMXN back to the support at 17.6000;
