Anna 
USD/MXN snaps a three-day losing streak, edging higher to approach the 17.00 level during the early European hours on Tuesday. The US Dollar (USD) strengthens as risk aversion takes hold, with investors anticipating significant economic data releases from the United States (US) later in the week.
Attention in the market turns to the ISM Services PMI data scheduled for release on Tuesday, with expectations set at 53.0 for February, a marginal decrease from the previous figure of 53.4. Notably, concerns surrounding inflation have subsided following the PCE Price Index meeting expectations.
Traders exhibit caution, choosing to await Federal Reserve (Fed) Chair Jerome Powell’s congressional testimony scheduled for Wednesday and Thursday. The market is eager for additional insights into the potential trajectory of rate cuts by the Federal Reserve.
Monday saw Atlanta Federal Reserve (Fed) President Raphael Bostic’s remarks gaining attention as he expressed uncertainty about achieving a soft landing. Bostic suggested that while he does not anticipate consecutive rate cuts when they commence, he expects two 25-basis point rate cuts in 2024.
Anticipation remains high in the market for the Bank of Mexico (Banxico) to implement monetary policy easing in March. Investors are expecting a reduction of 75 basis points (bps) over the next six months. Banxico officials have emphasized a measured approach to rate adjustments, stressing the importance of maintaining higher rates for an extended period.
Looking ahead, Consumer Confidence data is slated for release on Wednesday, followed by inflation data on Thursday. Last week’s release of January’s labor numbers already provided upward support for the Mexican Peso (MXN) against the US Dollar (USD), as the jobless rate increased to 2.9% year-over-year, surpassing expectations.
As the USD/MXN pair navigates these factors, market participants are advised to exercise vigilance and adapt their strategies in response to potential shifts in sentiment.
