Anna 
The USD/MXN pair continues its downward trajectory on Monday, remaining below the 16.60 mark for the second consecutive session. The Mexican Peso (MXN) has strengthened, propelled by unexpected positive news as the domestic Jobless Rate dropped to 2.5%, marking an eleven-month low and surpassing expectations of 2.8%. This encouraging development has enabled the Bank of Mexico (Banxico) to maintain stringent borrowing conditions in its efforts to combat persistent inflation.
Inflationary pressures have risen, with both headline and core measures reaching 0.27% and 0.33%, respectively, in the first half of March. Additionally, market participants eagerly anticipate the release of Consumer Confidence data for March, scheduled for Thursday, which could further impact currency movements.
Meanwhile, the US Dollar Index (DXY) faces headwinds amid lower US Treasury yields, hovering around 104.50. At present, the 2-year and 10-year yields on US bond coupons stand at 4.59% and 4.19%, respectively. The US Dollar (USD) is under pressure following dovish remarks made by Federal Reserve (Fed) Chairman Jerome Powell on Friday.
Chair Powell noted that the recent Personal Consumption Expenditures Price Index (PCE) data from the United States met expectations, reaffirming the Fed’s stance on potential interest rate cuts for the year. Fed officials maintain projections of three rate cuts for the year, with market participants anticipating the first of these cuts to occur at the June meeting.
Given the ongoing market sentiment, traders may exercise caution ahead of the release of the ISM Manufacturing Purchasing Managers Index (PMI) data from the United States later in the North American session, which could influence further market movements.
