Open an Account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open an Account
✖

Dont forget about Banxico on Thursday

June 23, 2021 9:41 AM

With much of the focus on the Bank of England Interest Rate Decision tomorrow, let’s not forget that the Bank of Mexico will also meet!  As they have since March, Banxico is expected to leave rates unchanged after a year and a half of easing rates from mid-2019 to March of this year. Policy makers feel the easing cycle may have come to an end as inflation has crept up from 3.15% in December to a high of 6.08% in April!  However, May’s reading pulled back slightly to 5.89%.  On the same day as the central bank meeting, Mexico will release is mid-month inflation rate for June, which economists expect to have ticked up to 6.1%.   Although this is much higher than their target rate of 3%,  members said they expect actual inflation to converge with their target inflation towards the end of the year.  They also said that they will take necessary actions if needed for this convergence to occur.

What are economic indicators?

USD/MXN has returned to pre-coronavirus levels between roughly 18.50 and 21.00.  Since the pandemic highs in April 2020, the pair has been putting in a series of lower highs. USD/MXN formed a bottom on January 21st near 19.55 and although it has been tested multiple times, bears have failed to push price lower.  On June 9th, the pair bounced off the lows and was halted near resistance on June 18th, just below the convergence of the downward sloping trendline and horizontal resistance near 21.00.

Source: Tradingview, FOREX.com

On a 240-minute timeframe, USD/MXN has since moved lower to the 50% retracement level from the June 9th lows to the June 18th highs near 20.1617.  (Notice that the RSI was in overbought territory just as price began to move lower.)  If price breaks below, the 61.8% Fibonacci retracement level from the same timeframe is near 20.03.  The June 9th lows come into play after that, as well as the January 21st lows near 19.55.  Horizontal resistance Hlk6516320is near 20.50, ahead of the recent highs at 20.7488.  Above there, horizontal resistance is at the 21.00 level.

Source: Tradingview, FOREX.com

The move off the lows in USD/MXN last week was extenuated by the hawkish FOMC.  IF Banxico is leaning more hawkish, combined with a higher than expected mid-month CPI reading, USD/MXN could move to new near-term lows. If, however, the Bank of Mexico is dovish leaning or the mid-month inflation reading is lower than expected, USD/MXN may trade back above 21.00!  Traders should be prepared to react to either outcome!

Learn more about forex trading opportunities.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.

© FOREX.COM 2025