Anna 
The Mexican Peso (MXN) remained largely unchanged on Wednesday as investors awaited the release of the US Consumer Price Index (CPI) data for April, a significant event likely to impact US interest rate expectations and the trajectory of the US Dollar (USD).
USD/MXN encountered notable technical resistance around 16.85, while EUR/MXN traded at 18.27 and GBP/MXN at 21.24 at the time of reporting.
Market analysts anticipate the headline CPI to reflect a 0.4% monthly increase in April, with core CPI expected to rise by 0.3%. Year-over-year, these figures would translate to 3.4% and 3.6% growth, respectively, slightly decelerating from the previous month’s readings.
A higher-than-expected CPI result could delay the Federal Reserve’s plans for interest rate cuts, potentially bolstering the US Dollar (USD) and pushing USD/MXN higher. Conversely, a lower-than-expected outcome might have the opposite effect.
In Europe, preliminary Gross Domestic Product (GDP) data for the first quarter met economists’ expectations, indicating a quarterly GDP growth rate of 0.3% and a year-on-year growth of 0.4%.
The Mexican Peso weakened over the past two days, driven partly by comments from Victoria Rodríguez Ceja, Governor of the Bank of Mexico (Banxico), suggesting a potential interest rate cut in June. Ceja indicated a willingness to consider downward adjustments to the main reference rate at the Banxico’s June 27 policy meeting, citing evolving inflationary trends.
Banxico had previously reduced its policy rate from 11.25% to 11.00% in March, marking its first rate cut since 2021. However, the bank opted to maintain the policy rate unchanged in its May meeting amid persistent inflationary pressures. These developments have influenced market sentiment towards the Mexican Peso, leading to recent fluctuations in its trading pairs.
