USD/MXN rebounds, rising to 24.12 as Mexican peso loses strength

• Mexican pesos loses strength after outperforming on Thursday.
• USD/MXN finds support at 23.70/75, heads for a small weekly gain.

The USD/MXN is rising on Friday after posting losses on Thursday followed a 50bps rate cut from the Bank of Mexico. The pair was testing yesterday’s low around 23.75 and bounced to the upside during the American session, climbing back above 24.00.

The Bank of Mexico cut its benchmark interest rate to 5.5%, the lowest level in more than three years. The central bank left the door open to more rate cuts. Analysts see more action from Banxico to boost the economy and as inflation remains under control.

In the US, economic data showed a record decline in retail sales that hit the US dollar. The greenback weakened, erasing gains and over the last hours it stabilised across the board, helping the rebound of USD/MXN.

Technical outlook

The USD/MXN continues to move between 23.70 and 24.40, in a consolidation range. In the short-term, resistance levels might be seen at 24.15, followed by 24.30 and then comes the upper limit of the range. On the flip side, immediate support stands at 23.90 and then comes the lower bottom at 23.74/75 (May 12, 14 & 15 low).