• USD/MXN weakened slightly on Thursday after Bank of Mexico signalled smaller rate cuts going forward.
• According to Thursday’s release of June meeting minutes, the Bank of Mexico is expected to deliver smaller rate cuts in the coming months.
• The minutes showed that the four policymakers backing June’s 50 bps rate cut, the fourth in a row, now favor a more measured approach going forward.
• Banxico has delivered 325 basis points of rate cuts since the start of 2024, including 200 bps this year alone, reflecting continued cooling in inflation from 2022 levels..
• Technical highlight downside risks for USD/MXN, with momentum studies, 5, 10 and 11 DMAs tracking south.
• Immediate resistance is located at 18.669 (9SMA), any close above will push the pair towards 18.794(38.2%fib).
• Support is seen at 18.461(23.6%fib) and break below could take the pair towards 18.309(Jul 29th 2024 low).
Recommendation: Good to sell around 18.650 with stop loss of 19.200 and target price of 18.400
