Facts:
• Unexpectedly Mexico's central bank left its benchmark interest rate unchanged
• Pandemic worsens in US
• Pair returned above the lower limit of the falling wedge formation
Recommendation:
• Trade: Long position on USDMXN at market price
• Target: 20.869 and 21.176
• Stop: 20.270
![]()
USDMXN, D1 interval. Source: xStation5
Opinion: The Mexican peso strengthened today against the greenback, after the country’s central bank left its benchmark interest rate unchanged at 4.25%, surprising markets that expected a 25 bps rate cut. Following 11 straight reductions stretching back to August last year, the Committee said that the pause to easing cycle provides the necessary room to confirm that the trajectory of inflation converges to the target. Further monetary policy will depend on the evolution of factors that affect headline and core inflation. Although economic activity rebounded in the third quarter of the year, it “remains below pre-pandemic levels in an environment of uncertainty and downside risks”, said the bank. Mexico is also struggling with a spreading pandemic. Country has registered more than 96,000 Covid-19 deaths – one of the world’s highest tolls.
Meanwhile the number of new infections in the US reached a record high of more than 153K on yesterday and many states are starting to impose new restrictions. In Chicago, Mayor Lori Lightfoot asked residents to cancel Thanksgiving plans and to stay at home and in New York, Governor Andrew Cuomo said new curfews on bars, restaurants, and gyms will take effect on Friday. This is a positive environment for the US dollar which is on track to book a more than 0.5% weekly gain.
From a technical point of view price managed to return above the lower limit of the falling wedge formation. This fact, combined with the worsening pandemic situation, may trigger an upward impulse in the short term. Therefore we recommend taking long position on USDMXN at market price with two targets: 20.869 and 21.176. We also recommend placing a stop loss order at 20.270.
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
USDMXN, D1 interval. Source: xStation5
