USD/MXN finds support after hitting 13-day lows

The Mexican peso is falling modestly against the US dollar on Tuesday, ending a 3-day slide. USD/MXN bottomed today at 18.67, the lowest since April 19 and then bounced to the upside.It was trading at 18.78, supported by a decline in crude oil prices. 

On Wednesday, USD/MXN peaked at 19.29, a 1-month high. Then it fell during three day’s in a row, until it found support today around 18.65/70, where the 20-day moving average currently stands. 

On a wider perspective, USD/MXN continues to consolidate after the sharp decline from 22.05 (Jan high) to 18.43 (Apr low). The pair spiked higher but it failed to consolidate above 19.00, signaling that the US dollar is not ready yet for a sustainable recovery. On the downside, the area around 18.50 is a very strong support. 

Banxico looking at Fed

Tomorrow the Federal Reserve will announce its decision on monetary policy. What the Fed decides has an impact on expectations about what the Bank of Mexico could do. The next meeting of Banxico is May 18. The Mexican central bank has been rising rates during the last year. Inflation is at multi-year highs. The exchanged rate, next week’s inflation data, and Fed’s decision will be the key drivers of Banxico’s decision in two weeks.