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USD/MXN Quick-Time period Rally Continues as US Treasury Yields Climb


USD/MXN, JPY/MXN – Costs, Charts, and Evaluation

  • USD/MXN bounces after posting a multi-year low.
  • Will demand for EM foreign money yield proceed to spice up the Mexican Peso?

One of many star FX performers during the last three years, the Mexican Peso is presently giving again a small a part of its latest features to a resurgent US greenback. The USD/MXN fee hit its lowest degree in over seven years final Friday (16.63) earlier than this week’s decide up in US Treasury yields gave the buck a lift throughout the board. US Treasury yields are shifting larger as fears of a recession fade, whereas the heavy upcoming provide schedule is giving US Treasury traders the backdrop to demand extra yield for his or her cash.

US 10-12 months Treasury Yield Each day Chart – August 3, 2023


The every day USD/MXN chart exhibits the pair has now damaged above each the 20- and 50-day easy shifting averages for the primary time since mid-March. These two shifting averages have been guiding the pair decrease for round one yr and a confirmed break above each might sign a slowdown, or an finish, to the longer-dated transfer decrease.

USD/MXN Each day Value Chart – August 3, 2023


One other pair to point out the power of this rate-differential is JPY/MXN with the high-yielding Mexican Peso appreciating by over 50% (excessive to low) towards the low-yielding Japanese Yen. Whereas the Mexican central financial institution has been mountaineering charges ever larger, the Financial institution of Japan has left its borrowing fee at ultra-low ranges in an effort to spice up inflation. The widening rate of interest differential between the 2 currencies has seen JPY/MXN on a one-way path during the last 3+ years. So long as the Financial institution of Japan stays placed on financial coverage, JPY/MXN will battle to interrupt larger.

JPY/MXN Weekly Value Chart – August 3, 2023


Charts by way of TradingView

What’s your view on the Mexican Peso – bullish or bearish?? You’ll be able to tell us by way of the shape on the finish of this piece or you possibly can contact the writer by way of Twitter @nickcawley1.

DailyFX gives foreign exchange information and technical evaluation on the tendencies that affect the worldwide foreign money markets.

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