Anna 
The USD/MXN pair is experiencing continued losses for the second consecutive day, with the pair trading lower around 17.08 during early European trading on Tuesday. The decline in the pair is attributed to a weakened US Dollar (USD), influenced primarily by subdued US Treasury yields. Additionally, an improved risk appetite in the market is adding downward pressure on the Greenback, acting as a headwind for USD/MXN.
The US Dollar Index (DXY) has dipped to around 103.70 due to the subdued US Treasury yields. At the time of reporting, the 2-year and 10-year yields on US bond coupons stand at 4.71% and 4.28%, respectively. The recently released Federal Open Market Committee (FOMC) minutes have reinforced a data-dependent approach by the Federal Reserve (Fed), signaling a more dovish stance, further contributing to the weakening of the US Dollar (USD).
Investors are closely monitoring key economic indicators scheduled for release later in the week, including Gross Domestic Product Annualized (Q4), Core Personal Consumption Expenditures, and the Fed Monetary Policy Report.
The minutes from a recent Bank of Mexico (Banxico) meeting revealed that three policymakers are considering the possibility of implementing the first rate cut at the upcoming March meeting. This consideration is strengthened by the economic deceleration highlighted in recent inflation figures. Such sentiment could potentially exert pressure on the Mexican Peso, thereby supporting the USD/MXN pair.
Contrary to expectations, Mexico’s 1st half-month inflation for February decreased, while 1st half-month Core Inflation expanded slightly below expectations. Market participants are eagerly awaiting the release of January’s Trade Balance data on Tuesday, with a close eye on potential implications for the economic landscape and currency movements.
