The Mexican Peso recovered some ground on Friday against the Greenback after the Federal Reserve’s (Fed) preferred inflation gauge, the core Personal Consumption Price Expenditures Price Index (PCE), was a tenth lower than expected, suggesting that the disinflation process has evolved.
Mexican Peso strengthens against US Dollar as core PCE inflation falls below expectations, boosting prospects for Fed rate cuts. Ongoing political uncertainties in Mexico dampen Peso’s demand. Banxico cuts GDP forecasts for 2024 and 2025, indicating slower growth and potential rate cuts.
65 figure as traders grow confident the Fed will begin its easing cycle, reducing the interest rate differential between the US and Mexico. The Relative Strength Index is mixed, in bullish territory but aiming lower, showing that sellers have the upper hand in the near term. On further USD/MXN weakness, the first support would be 19.50. A breach of the latter will expose the August 23 swing low of 19.02 before giving way for sellers eyeing a test of the 50-day Simple Moving Average at 18.59.
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