USDMXN opened Monday at 17.3518 and closed Friday at 17.4630, gaining 1,112 pips or 0.64% on the week. The pair surged 2,552 pips on Friday alone, its largest single-day move of the week.
Wednesday's US CPI release at 12:30 UTC dominates the calendar. Core CPI is forecast to accelerate to 0.5% month-on-month from April's 0.4%, while headline CPI is expected to slow to 0.3% from 0.6%.
Thursday brings a double header with the Bank of Canada rate decision at 13:45 UTC (consensus: hold at 2.25%) and the ECB rate announcement at 12:15 UTC. The ECB is widely expected to hike its main refinancing rate to 2.40% from 2.15%. US PPI data lands the same day.
If US core CPI prints above the 0.5% forecast, peso weakness typically accelerates as the dollar strengthens broadly. A reading at or below 0.4% would reverse Friday's surge and pull the pair back toward 17.30.
The ECB decision adds complexity. A hawkish surprise (rates above 2.40% or aggressive forward guidance) could weaken the dollar index and cap USDMXN gains. A dovish ECB would compound any dollar strength from hot US inflation data.
Traders enter Monday with 61.8% of positions long USDMXN and 38.2% short. This bullish skew reflects momentum from Friday's breakout and sets up for potential profit-taking if CPI disappoints dollar bulls.
Friday's high at 17.5335 stands as immediate resistance. A daily close above it opens the path to 17.60. Support sits at the pre-surge level near 17.28, then the week's low at 17.2583. These are reference levels for context, not entry signals.
Open an LHFX account to trade USDMXN this week.
Byline: LHFX Research
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