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- USD/MXN rebounds from 16.97 as buyers defend 17.00.
- Weak Retail Sales and sentiment deepen US Dollar pressure.
- Banxico minutes and Mexico Retail Sales drive next catalysts.
USD/MXN refreshed 24-month lows below 17.00 on Friday, but it has recovered some ground, with buyers stepping in and reclaiming the 17.00 level. Data from the United States (US) weighed on the Greenback, as consumer sentiment and Retail Sales deteriorated. The pair trades at 17.02, after bouncing off daily lows of 16.97.
USD/MXN holds near two-year lows as traders price out Fed hikes
US data proved benign on the inflation front, with consumer and producer prices edging lower. The Nonfarm Payrolls reading on August 7 and jobless claims on Thursday paint a picture of ‘some’ softening, but give Federal Reserve officials no reason to say labor market risks are tilted to the upside.
On Friday, Retail Sales disappointed investors, contracting 0.6% MoM, below forecasts of a 0.1% expansion, and June’s 0.2%. The University of Michigan Consumer Sentiment preliminary reading in August showed some deterioration in sentiment among American households, as the Index dipped from 55.2 to 51, while inflation expectations remained little changed.
The backdrop prompted an aggressive pricing out for a Fed rate hike in 2026. For the September meeting, the odds are 32% for a hike and 68% for keeping interest rates steady.
In Mexico, Economy Secretary Marcelo Ebrard stated that Mexico is asking the US to eliminate or reduce tariffs on the automobile industry. He argued that vehicles made in Japan, South Korea, Germany, or Morocco pay a 15% tariff, while those in Mexico face a 25% tariff.
“So, give me a discount, because I buy more parts of the United States from you than the other countries, I just mentioned”, Ebrard said.
Next week, Mexico’s economic schedule will be busy, with investors eyeing the release of the Bank of Mexico’s (Banxico) last meeting minutes and Retail Sales data. In the US, the docket will feature housing data, the ADP Employment Change 4-week average, jobless claims and Flash PMIs.
USD/MXN Price Forecast: Technical outlook
In the daily chart, USD/MXN trades near 17.0294, extending its slide beneath the clustered simple moving averages in the Moving Average Triple around 17.3775. Price action remains capped by the more recent descending resistance trend line, which comes in near 17.4197, while the Relative Strength Index (14) sits around 27 and drifts into oversold territory, hinting that bearish pressure is stretched but still dominant as long as the pair holds below these overhead barriers.
On the downside, the next notable structural floor aligns with the earlier downtrend break level around 15.6176, which acts as a distant but important support reference should the decline deepen. On the topside, a recovery would first need to reclaim the Moving Average Triple resistance near 17.3775, followed by a clearer break above the descending resistance trend line at 17.4197 to ease the bearish bias and open the way for a more sustained corrective rebound.
