USD/MXN rebounds after reaching lowest in almost 4-months

The Mexican peso retreated after hitting earlier today the strongest level against the US dollar since the US President election. USD/MXN continued to slide on Monday, after breaking below 19.65 on Friday. 

The pair bottomed at 19.43 and then rebounded. It was trading around 19.55, slightly above Friday’s closing price. Despite the bounce, the bias continues to point to the downside, particularly if the price remains under 19.65 (61.8% Fibonacci retracement of the Nov - Jan rally). 

The Mexican peso is among the top performers of the year so far among the most traded currencies as it continues to recover after tumbling from November to January when USD/MXN reached all-time highs above 22.00.

Data ahead 

In the US, the most relevant report during the week will be on Friday, with the release of the official employment report. Market consensus point toward a gain of 180K in NFP in February. 

While in the Mexico, the most important report will be inflation data on Thursday. The CPI is expected to rise to 4.81% (annual) from 4.72% in January according to analysts from Brown Brothers Harriman.  “Banxico warned of above-target inflation for 2017 in its quarterly inflation report.  It also cut its 2017 growth forecast to 1.3-2.3% from 1.5-2.5% previously and its 2018 growth forecast to 1.7-2.7% from 2.2-3.2% previously.  As such, we do not think it will tighten further if the peso remains firm.  Next policy meeting is March 30, and no move is likely even if the Fed hikes March 15”, analysts from BBH added.