- Mexican Bizo maintains gains before the “beautiful, beautiful” tax bill voting on Wednesday.
- The direction of the US dollar and the developments outside the United States remains dominant factors that affect the exchange rate of the US dollar/MXN.
- USD/MXN remains under pressure, with prices hovering near the lowest seven months.
The Mexican Bizo (MXN) maintains a company against the US dollar (US dollar) on Tuesday after reaching its highest levels in the early hours of the European session, where the markets turn into caution before the House of Representatives voted on Wednesday on a “beautiful, beautiful bill”.
The legislative uncertainty surrounding the proposed tax package weighs the dollar, as investors evaluate its potential effects on financial policy and American debt levels.
The market also responds, USD/MXN decline by 0.20 %, and trading lower than the 19.30 axial level at the time of writing this report.
Daily Digest Peso Daily Mexican: remain USD/MXN at the mercy of Greenback
- Since the US dollar is leading a wider direction in the market, the transformations in the feelings of the US dollar are driven by American financial policy, economic data, or federal reserve signals, tend to dictate the short -term track of the US dollar/MXN, with the reaction of the bizo accordingly.
- The House of Representatives will vote on a “beautiful draft law” for President Trump, which aims to expand the 2017 tax cuts law and jobs and introduce new tax relief measures.
- While the draft law may enhance the short -term growth, the federal deficit is expected to increase significantly over the next decade, raising concerns about the long -term sustainability of US debt and pressure on the US dollar.
- Throughout the day, federal reserve officials, Thomas Parkin, Alberto Moussal, Adriana Koger, Rafiel Bustic, Mary Dali and Bath Hamak, are scheduled to speak, as the markets closely see their observations on evidence of the Federal Reserve Policy expectations amid economic and economic uncertainty.
- On Friday, Moody’s became the latest credit agency that reduces American sovereignty classification.
- Due to the high risk of perceived credit, the United States must provide higher interest rates to attract investors who may turn capital into safe alternative assets.
- On Wednesday, Mexico will issue retail sales data in March, while the country will issue on Thursday the first half of May and the data of the gross local product for the first quarter.
- On the American side, S& P Global will issue the initial purchasing managers index (PMIS) for the month of May and current home sales data for April on Thursday for new economic signals.
- In short, the USD/MXN pair is a sensor of data that restores expectations for growth and inflation and the central bank’s trend in any of the countries.
Mexican Peso Technical Analysis: Peso stability with USD/MXN less than 19.30
USD/MXN has decreased to its lowest level since October, as it has hacked the previous psychological support level, which has now turned into resistance at 19.30.
Currently, prices are lower than the descending trend line that was created during the decline in April.
The RSI Index Index (RSI) explains at 36 an increase in the declining momentum. Since the 30th brand is considered a potential sale in the sale, the declining trend remains intact, with the next main support level in the round number of 19.20.
USD/mxn daily table
If prices fall to less than 19.20, the door may open to the lowest level in October about 19.11, which paves the way for about 19.00.
On the other hand, if the power of the US dollar decreases and prices rise above the descending trend line, the US dollar/XN may witness a re -test of the lowest level in April near 19.47, leading to the operation of the simple moving average for 20 days (SMA) in 19.53.
Questions and answers in US dollars
The USD (USD) is the official currency of the United States of America, and a “reality” currency for a large number of other countries where there is a circulating alongside local notes. It is the most trading currency in the world, as it represents more than 88 % of the rotation of global foreign currencies, or on average $ 6.6 trillion in transactions per day, according to data from 2022. In the aftermath of World War II, the United States took over the British pound the world reserves. For most of its history, the US dollar was backed by gold, even the Bretton Woods agreement in 1971 when the golden standard went.
The most important individual factor that affects the value of the US dollar is the monetary policy, which is formed by the Federal Reserve (Fed). The Federal Reserve has two states: to achieve price stability (control of control) and enhance full employment. Its primary performance to achieve these two goals is to adjust interest rates. When prices rise very quickly and inflation is 2 % higher than the Federal Reserve goal, the Federal Reserve will raise rates, which helps the value of the dollar. When inflation decreases to less than 2 % or the unemployment rate is very high, the Federal Reserve may reduce interest rates, which weighs to green.
In maximum situations, the Federal Reserve can also print more dollars and quantitative mitigation (QE). QE is the process that the Federal Reserve increases significantly from the flow of credit in a suspended financial system. It is a measure of the non -standard policy used when the credit is dry because banks will not lend to each other (for fear of failing to pay the opposite end). It is the last resort when it is unlikely to achieve interest rates simply the necessary result. The Federal Reserve is the preferred to combat the credit crisis that occurred during the great financial crisis in 2008. It includes the printing of the Federal Reserve more dollars and their use to buy US government bonds mostly from financial institutions. QE usually leads to the weakest US dollar.
The quantitative tightening (QT) is the opposite process in which the Federal Reserve stops buying bonds from financial institutions and does not invest the manager from the bonds he holds in new purchases. It is usually positive for the US dollar.
