USDMXN Forecast / Forex Technical Analysis

USDMXN Forecast – Peso Falls with Slowing Inflation

FxNews—The USDMXN currency pair’s trading pattern displays bullish tendencies. On Friday, the pair finished the trading session close above the pivotal mark of 17.36. The Relative Strength Index (RSI) is also positioned above the 50 level, indicating bullish momentum.

USDMXN Technical Analysis and Forecast

This upward trend in the USDMXN pair suggests a potential increase in its value. Analysts at FxNews anticipate a movement toward the median line of the bullish flag pattern. Should the bulls secure a position above the median line, the next goal for buyers would be the upper boundary of the flag. This scenario envisions a continued bullish trend, reflecting a positive outlook for the pair.

USDMXN Forecast – Peso Falls with Slowing Inflation – 4H Chart

However, it’s essential to consider the scenario where this bullish trend might not hold. If the bears close below the 17.30 support and maintain stability, it would invalidate the current bullish scenario. In such a case, investors might need to reevaluate their strategies, considering the possibility of a downward or bearish trend.

Peso Falls with Slowing Inflation

Bloomberg—The Mexican peso has recently weakened, falling over the 17.4 mark against the US dollar. This decline comes after a brief period of gains and is primarily attributed to signs of decreasing inflation. November’s core inflation in Mexico was recorded at 5.3%, lower than the anticipated 5.34% and a drop from the previous month’s 5.5%.

This aligns with the recent statements from Banxico’s Governor Victoria Rodriguez Ceja and Deputy Governor Jonathan Heath. They indicated a potential easing of policies if the trend of reducing inflation continues, which has lessened the backing for the Mexican peso.

On the other hand, Mexico’s consumer confidence has risen, reaching 47.3, which is higher than the 46.2 noted in October. This is the highest level of confidence observed since February 2019. This increase suggests growing optimism and economic resilience within the country, possibly reducing the immediate need for the Bank of Mexico to ease its strict monetary policies.