The bizo is still fixed with federal reserve signals, and the risks of international tariffs are cautious
- The Mexican Bezo holds a company optimistic about commercial talks between the United States of China that supports emerging markets.
- Traders are still focusing on the upcoming decision of the Federal Reserve, as President Jerome Powell’s comments are likely to affect prices.
- USD/MXN tests medium support
The Mexican Bizo (MXN) extends gains against the US dollar (US dollar) on Wednesday, and benefits from renewed hopes of escalation in global trade tensions after positive developments between the United States and China. The optimism surrounding the upcoming trade dialogue between senior American and Chinese officials, which will be held in Lucerne, Switzerland, during the weekend, raised the feelings of the broader emerging market. For Mexico, low global commercial friction supports external demand, reduces aversion to risk, and relieves pressure on capital flows, which contributes to the stability of the last bizo.
With the US dollar circulating near 19.612, a decrease of 0.28 % at the time of writing this report, the currency pair remains tightly aligned with transformations in risk morale and monetary policy expectations. While global trade conversations and uncertainty in the customs tariff continue to influence the location of the investors, attention now focuses on the interest in the Federal Reserve (Fed), due on Wednesday.
The Mexican Peso is looking for Powell’s instructions for the next policy braid
The statement of the Federal Open Market Committee (FOMC), followed by the press conference of the Federal Reserve, Jerome Powell, will be the key to the formation of short -term expectations for the US dollar, and therefore, Mexican Bezo.
Although the CME Fedwatch tool currently indicates a possibility of 95.6 % that the Federal Reserve leaves interest rates unchanged within the current 4.25 % -4.50 % range, Powell will be analyzed on inflation, growth and credit conditions closely. These notes carry the potential to move the market, especially if the expectations about reducing the expected price in July changed.
The transformations in the American treasury and the dollar path are likely to turn into EM currencies such as the bizo, which are sensitive to global liquidity and interest rate.
The Mexican Bizo is monitored by the US diplomacy
Meanwhile, tensions between Mexico and the United States are still dangerous against a decisive background. On Saturday, Mexican President Claudia Xinbum publicly rejected a proposal from US President Donald Trump to send American forces to Mexico to combat drug gangs. “We respect bilateral cooperation, but we will not accept the forces on our soil,” Shinbom said during a speech in Texas. Trump later confirmed the show in the comments on the correspondents on Air Force One on Sunday, saying: “We have made the offer. Cartlatat is a threat to both countries. If they want to help, we will provide it.”
On Tuesday, the Mexican Foreign Ministry responded with an official statement that strengthens the sovereign Mexico position: “Mexico is in line with international agreements, but sovereignty is not negotiable.” These developments, in addition to the current US definitions about Mexican exports, continue to influence bilateral confidence and increase uncertainty in regional trade and investment.
Given that approximately 80 % of Mexican exports are related to the United States, any deterioration in the United States and Mexico relations, whether by increasing definitions, different policy, or diplomatic conflict, is a clear danger to the peaso. At the same time, positive signals from the broader global trade environment, including the discussion of the United States of China, may help compensate for some of this pressure if the feeling of improvement persists.
Peso Daily Digest Mexico: Waiting for Powell’s words
- US President Donald Trump, President of the Federal Reserve, criticized Jerome Powell, frankly due to high interest rates, claiming that the central bank “is harmful to American competitiveness.” While the Federal Reserve maintains its independence, the political discourse adds pressure during the sensitive policy phase.
- Security and commercial agreements between the United States and Mexico were subjected to renewed pressure after the recent notes by the two governments. The dispute over sovereignty and the deployment of forces risk risk the complexity of the broader bilateral coordination, including migration and trade.
- On Monday, the Mexican government revealed a financial support package aimed at small companies and developing infrastructure in response to slow growth. The initiative aims to support local demand without undermining financial stability.
- Mexico is expected to reduce its standard price by 50 basis points on May 15, as inflation continues. GDP (GDP) increased by 0.2 % in the first quarter, avoiding technical recession, but weak investment and external demand are still burdening with economic momentum.
Technical expectations of Mexican Peso: Monotheism Signs
USD/MXN is trading near 19.603, at the time of this report on Wednesday, the monotheism range has run between 19.46 and 19.76 since April 18.
Initial support can be found on a simple 10 -day moving average (SMA) at 19.601. A lower break from this level will reinforce the lowest level in April 19.46.
USD/MXN Daily Chart
The momentum indicators remain defeated. RSI is falling near 42.44, less than a 50 neutral line, indicating a strong directional lack of condemnation. The general structure continues to reflect the frequency.
To the upward trend, any bullish confirmation will need to overcome psychological resistance in 19.80. A break over this area can open the door for a decline of 23.6 % Fibonacci, which was drawn from the highest level on April 9 from 21.08 to April 23 from 19.46, in 19.85, and towards 20.07 (38.2 % of Fibonacci). However, this result is likely to require a surprise or shift in a tone of the Federal Reserve Chairman Jerome Powell during the press conference today.
Common questions among central banks
Central banks have a major mandate is to ensure that there is a price stability in a country or region. Economics are constantly facing inflation or contraction when the prices of some goods and services fluctuate. High prices for the same goods mean inflation, and the continuous reduction of the same goods means shrinkage. The central bank’s mission is to maintain demand for queue by adjusting the policy price. For the largest central banks such as the American Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BOE), the mandate is to maintain inflation approximately 2 %.
The central bank has one important tool at its disposal to obtain inflation higher or less, and this is by changing the standard policy price, known as the interest rate. In the previous moments, the Central Bank will issue a statement of its policy price and provide an additional reason about the reason that remains or changes (cutting or walking). Local banks will adjust their savings rates and their lending rates accordingly, which in turn will make it difficult or easier for people to gain their savings or companies to obtain loans and provide investments in their business. When the central bank raises interest rates significantly, this cash tightening is called. When you cut its standard price, it is called cash reduction.
The central bank is often political independent. Members of the Central Bank Policy Council pass through a series of paintings and sessions before being appointed to the Policy Council seat. Every member of this council is often a specific condemnation of how to control the central bank for inflation and subsequent monetary policy. Members who want a very loose monetary policy, with low cheap lending rates, are called to increase the economy significantly while they are satisfied with a slightly higher vision of inflation than 2 %, “doves”. Members who want to see higher rates to reward savings and the desire to keep lighting on inflation at all times “hawks” will not be rest until inflation is at 2 % or less than 2 %.
Usually, there is a president or president who leads each meeting, who needs to create a consensus between hawks or doves and has a final saying when it is divided into the division of voting to avoid a 50-50 tie about whether the current policy should be modified. The president will often deliver speeches that can be followed directly, as the current monetary position and expectations are connected. The central bank will try to push its monetary policy forward without operating violent fluctuations in prices or shares or currency. All members of the central bank will direct their position towards the markets before the policy meeting occurred. A few days before a policy meeting was held until the new policy is connected, members are prevented from speaking publicly. This is called the obstruction period.
