Anna 
The USD/MXN pair has surged for the second consecutive day, recovering from an eight-month low recorded at 16.64 on Thursday. During European trading hours, the pair is seen attempting to extend its gains, hovering around 16.70.
The resurgence in the pair follows the release of upbeat US Core Producer Price Index (PPI) data for February, which exhibited a 2.0% year-over-year increase, surpassing expectations of 1.9%. This positive data has bolstered the US Dollar, consequently lending support to the USD/MXN pair.
The recent economic indicators present challenges for the Federal Reserve as it navigates its decision-making process regarding interest rate adjustments. Market participants eagerly anticipate insights into the Federal Reserve’s policy trajectory from the preliminary US Michigan Consumer Sentiment Index for March, set to be released on Friday.
Officials from the Bank of Mexico (Banxico) have emphasized the importance of prudence in adjusting interest rates. While Governor Victoria Rodriguez Ceja advocates for a gradual approach to rate adjustments, Deputy Governor Jonathan Heath has cautioned against the risks associated with premature rate cuts.
However, Banxico Deputy Governor Omar Mejia hinted at the possibility of an interest rate cut during a podcast on Wednesday. Mejia argued that such a move wouldn’t be premature given the elevated level of rates maintained by the bank. Market sentiment is now pricing in expectations that Banxico could implement rate cuts as early as the March 21 meeting.
