Peso Pressure Ahead of Major MXN Events Mexico's inflation data will be released Thursday morning, closely followed by the Central Bank of Mexico's interest rate decision in the afternoon.
July's headline inflation in Mexico is expected to have accelerated to its highest level in over a year, according to a Reuters poll. However, the core index is anticipated to continue its moderation.
Rising prices in July could complicate any plans for the central bank to lower its key interest rate this week. In late June, the central bank opted to keep its benchmark interest rate unchanged after a rate cut in March, the first since mid-2021 when it began its tightening cycle.
The Mexican Peso has extended its losing streak to four consecutive days against the US Dollar, marking ten losses in the last eleven sessions.
The currency closed above the psychological 19.00 level for two days, having surpassed the previous year-to-date high of 18.99. Market momentum could favor sellers, with the Relative Strength Index indicating overbought conditions. The immediate resistance might stand at the current year-to-date high of 20.22.
On the downside, a breach of the 19.00 support level could open the path to the August stumble close to 18.50, followed by the 50-day Simple Moving Average at 18.20.
Bankofmexico
BRLMXN | 2021 Grand Slam Trade📌 Another classical procedure can be witnessed here, the combination of fundamentals and technicals, of BRL and MXN, and a live example of an instrument finding a floor for the long run.
This advance would (and of course I am considering) be worth attacking and having some involvement rather than laying bare the base of Brazil and Mexico. The correct play is to wait patiently for a confirmed break and hold long enough for the Peso to flee. Be long Brazil, stay long the Real and play the break as follows:
Firstly, the BRL diagram which is showing as with a few other currencies signs of bottoming versus USD, and the following two macro formations of Brazilian inflows and Mexican outflows. These drivers are going to dictate the pace and will allow a breakout on BRLMXN for a +50% move. This is not talking in pips, pips are for pipsqueak's... this is a macro swing, a full blown % move which starts as a hedge and when it begins to work with the break it means we can go HARD.
Thanks as usual for keeping the feedback coming 👍 or 👎