The Mexican Peso extended its gains for the ninth consecutive day on Wednesday, with the USD/MXN pair trading at 17.24, down 0.10% from previous levels [1]. This sustained rally comes amid a de-escalation in the Gulf War, as reports indicate an imminent agreement between Oman and Iran for a temporary 60-day arrangement in the Strait of Hormuz, potentially renewing the ceasefire between the US and Iran. The deal would allow ships to transit through Iranian waters and exit via Oman, with both parties given 30 days to clear mines from the central channel of Hormuz [1].
The US Dollar remained under pressure following softer-than-expected US jobs data. The ADP Employment Change report showed private hiring in July eased to 44K, significantly below the estimated 70K and the previous 98K [1]. Business activity in the US services sector expanded below estimates, though it showed some improvement, while inflation within the ISM Services PMI edged higher, raising the likelihood of further tightening by the Federal Reserve [1]. Fed Governor Lisa Cook stated she is prepared to raise rates if inflation does not cool, but currently favors keeping rates steady to await more data. Minneapolis Fed President Neel Kashkari advocated for gradual rate hikes, and Kansas City Fed's Jeffrey Schmid emphasized the need for strict monetary policy to combat high inflation [1].
Looking ahead, investors are focused on the upcoming US Nonfarm Payrolls report for July, with economists expecting job creation of 80K and the unemployment rate to remain steady at around 4.2% [1]. In Mexico, a Reuters poll suggests most economists expect the Bank of Mexico (Banxico) to hold rates unchanged at 6.50% at its August 6 meeting. Consumer Confidence improved in June, and traders await inflation data on Friday, which is expected to rise from -0.27% to 0.03% month-on-month, while core inflation is projected to dip from 0.24% to 0.22% [1].
Technically, USD/MXN trades at 17.2377, below the triple simple moving average cluster at 17.4126, which now acts as immediate resistance. The Relative Strength Index (RSI) at 37.6 is drifting toward oversold territory, suggesting downside momentum remains but is becoming stretched [1].
CONCLUSION
The Mexican Peso's nine-day rally is supported by geopolitical de-escalation and weaker US jobs data, pressuring the US Dollar. Market participants are closely watching upcoming US and Mexican economic releases, with Banxico expected to hold rates steady and US Nonfarm Payrolls in focus. Technical indicators suggest continued bearish momentum for USD/MXN, though the move may be nearing exhaustion.