The Mexican Peso (MXN) weakened against major currencies on Tuesday, following the news of a failed assassination attempt on former US President Donald Trump. The incident triggered a surge in US Treasury yields and the US Dollar (USD), while the MXN faced downward pressure due to concerns about potential trade implications under a Trump presidency.
Banxico Comments Boost Peso
However, the Peso partially recovered on Monday, bolstered by comments from Bank of Mexico (Banxico) Deputy Governor Omar Mejia. Mejia, the sole dissenter in favor of a rate cut at the June meeting, advocated for a gradual easing approach, suggesting a single cut wouldn’t necessarily signal the start of a full-blown easing cycle.
This reassurance, coupled with Mexico’s high interest rate of 11.00%, which continues to attract foreign investment, helped the MXN regain some ground.
USD/MXN Technical Analysis: Potential Bullish Reversal?
The USD/MXN pair is showing signs of a potential bullish reversal, having found support at the 50-day Simple Moving Average (SMA) and forming a two-day reversal pattern. Additionally, the completion of a Measured Move (MM) pattern suggests a possible shift in momentum towards an uptrend.
However, a break below the 50-day SMA at 17.60 would invalidate this bullish outlook and could lead to a retest of the 200-day SMA and a major trendline support at 17.27.
Key Points:
- Mexican Peso weakens on Trump assassination attempt, rebounds on Banxico comments.
- Higher US yields and potential trade implications under Trump presidency weigh on MXN.
- Banxico’s cautious approach to rate cuts provides some support for the Peso.
- USD/MXN technicals suggest a potential bullish reversal, but downside risks remain.