USD/MXN rebounds from 18.90, faces resistance below 19.00

  • Mexican peso hits the highest level in five months versus US dollar, then reverses. 
  • USD/MXN having the best day since the beginning of the month. 

The USD/MXN is rising on Wednesday, after falling during five consecutive days. Yesterday it posted the lowest daily close since early July. The support area around 18.90 capped the decline in USD/MXN and today the pair rebounded approaching 19.00. 

As of writing, USD/MXN trades at 18.96 offering some signs of stabilization and consolidation ahead, following the slide from 19.60 to 18.88, the lowest level in five months. 

Eyes on Banxico 

On Thursday, the Bank of Mexico will have its monetary policy meeting. A 25bps rate cut is expected and the central bank according to analysts will continue its easing cycle next year. BBVA economists anticipate that Banxico will cut the 25bp monetary rate in each of the next six meetings, bringing it to 7.25% tomorrow and to 6.0% in August 2020.

“We anticipate that Banxico will maintain excessive caution and will not take its monetary stance to an accommodative level in 2020. However, we also expect the rate cut cycle to continue with no pause until August 2020, bringing the nominal monetary policy rate and the monetary stance to neutrality in the summer
of next year. Thus, we anticipate that the rate cut cycle has plenty of room to go”, explained BBVA analysts. 

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