Mexican Peso Rebounds Against American Dollar on Optimistic Market Sentiment
In Monday’s trading, the Mexican peso made a strong recovery against the American dollar, buoyed by an optimistic market outlook and the anticipation of US inflation data. After a losing streak of seven consecutive sessions, the currency appreciated and closed at 17.3058 units per dollar, marking an improvement of 30.23 cents or 1.72 percent, according to official data from the Bank of Mexico (Banxico).
Throughout the day, the exchange rate fluctuated between a high of 17.5949 units and a low of 17.2897 units. The Dollar Index (DXY), which measures the greenback against a basket of six reference currencies, fell 0.52% to 104.54 points at the close.
Traders and investors are eagerly awaiting the release of US inflation data later this week. If the data confirms a downward trend, it could reinforce the likelihood that the Federal Reserve will keep interest rates unchanged during its upcoming meeting on September 19 and 20. According to the CME Group’s FedWatch analysis tool, there is a 93% possibility that there will be no rate adjustment in the United States this month.
Financial markets have responded positively to comments made by US Treasury Secretary Janet Yellen, who expressed optimism about the direction of inflation during the annual G20 meeting in New Delhi, India.
“The peso begins the week with gains against a dollar that is losing energy. The group of emerging currencies mostly advanced, with the peso leading the Latin American bloc,” said Juan Carlos Cruz Tapia, a professor at the Banking and Commercial School (EBC).
From a technical standpoint, Cruz Tapia noted that the peso had found strong support at the 17.40 level and will now test the 100-day moving average at 17.27. He suggested that a breakout with volume could potentially push the currency to retest the psychological level of 17.
The Mexican peso’s rebound comes after a period of decline, during which it experienced a 5.07% loss. This downward movement began after the Mexican Exchange Commission announced a reduction in its exchange coverage.
Overall, the Mexican currency’s recovery reflects a more positive sentiment in the market and highlights the impact of upcoming US inflation data on monetary policy decisions.