FxWirePro: USD/MXN downside pressure builds, key support level in focus

• USD/MXN dipped on Wednesday as the dollar weakened after softer-than-expected U.S. inflation data reinforced expectations of a Fed rate cut next week.

•The U.S. Labor Department reported that producer prices rose 0.9% in July, well above the consensus forecast of a 0.2% increase.

• Recent labor market data confirms the U.S. jobs market is losing momentum, with slower hiring, rising unemployment, and cooling wage growth signaling a broader slowdown in economic activity.

• Traders widely expect the Fed to cut rates by 25 bps next week, while CME’s FedWatch tool shows a 10% probability of a larger 50 bps cut.

• Investor focus shifts to Thursday’s consumer price data for fresh clues on U.S. inflation trends..

•  Immediate resistance is located at 18.635 (50%fib), any close above will push the pair towards 18.694(SMA 20).

• Support is seen at 18.569(38.2%fib) and break below could take the pair towards 18.501(Lower BB).

Recommendation: Good to sell around 18.600 with stop loss of 18.800 and target price of 18.400