Banxico Cuts 25bps as Expected, USMCA in Play

USD/MXN bulls will buy dips, as the pair had pulled back and held previous support.

The Bank of Mexico, Banxico, cut rates by 25bps to 7.75%, as expected.  The decision was not unanimous though, as 2 members voted to cut rates by 50bps.  However, possibly more important for the direction of the USD/MXN is that earlier in the day US House Speaker Pelosi said the House is moving ahead on the trade deal with Mexico to replace NAFTA.  This comes after weeks of speculation from the Speaker that the USMCA (United States-Mexico-Canada Agreement) was not going to be enforceable, and therefore, would not be brought to the House floor.

USD/MXN was bid early in the session, in synchronicity with the DXY.  However, upon news that the House will move ahead with the USMCA, the pair paused, just as it moved through horizonal resistance at 19.6675 and ahead of the 38.2% extension level form the August 29th high to the September 19th low, as shown on a 240-minute chart.  The RSI is right at 70.  A reading of 70 or above is considered to be in overbought territory. USD/MXN also broke out of a pennant formation today.  The target for a pennant is length of the “flag pole” added to the breakout point of the pennant, which is 19.7825.  This level coincides with the next area of resistance is 19.7932, which is the 50% retracement of the previously mentioned move. Given the USMCA news, the overbought RSI, and the 38.2% Fibonacci retracement level, a pullback may be in order first.  Support is now near the breakout point of the triangle at 19.5850.  Next level of support is the trendline of the pennant, which comes in around 19.5294.

Source: Tradingview, City Index

USD/MXN bulls will buy dips as the pair had pulled back and held previous support near 19.3700. They will be looking for a move up to the confluence of previous highs, the 127.2% retracement level of the June 4th highs to the July 5th lows (this was also the previous high), and the descending trendline going back to June 2018.  That resistance zone is between 20.1108 and 20.1274. 

Source: Tradingview, City Index

However, although the USMCA announcement was the only news mentioned regarding this today, watch for more comments regarding it.  If the vote does go to the House floor and gets passed, this should be bullish for the Mexican Peso (bearish for USD/MXN).


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.