The Mexican Peso (MXN) has declined against the US Dollar, primarily driven by weaker-than-expected retail sales data. The data suggests a potential slowdown in the Mexican economy, which could lead to lower inflation and influence the Banco de Mexico’s monetary policy decisions.
Additionally, concerns about the unwinding of carry trade positions in the Mexican Peso have contributed to the currency’s weakness. The carry trade, which involves borrowing in low-interest-rate currencies and investing in higher-yielding ones, has been less attractive due to the recent decline in interest rate differentials.
Technical Outlook
The USD/MXN currency pair has shown a short-term reversal, with a potential bullish trend emerging. The breakdown of the bearish candlestick pattern suggests a change in momentum, and a break above the 0.8550 level could signal a further upward move. However, the pair remains within a broader uptrend, and a pullback towards the 50-day SMA at 18.43 is possible.