Mexican Peso rescued by Waller’s dovish tilt, appreciates ahead of NFP

The Mexican Peso appreciates against the US Dollar on Thursday, with the latter weakening amid a dovish tilt by Fed Governor Waller and speculation about an FX market intervention to boost the Japanese Yen. The USD/MXN trades at 16.92, down 0.32%.

USD/MXN dives amid soft US jobs data, but capped by strong PMIs in the US

Wall Street finished Thursday’s session on a positive note, as Fed Governor Waller opened the door to holding rates unchanged. He supports that decision if the disinflation process evolves, but if a red-hot US CPI report is released next week, he warned that a rate hike is possible.

Data in the US revealed that Initial Jobless Claims for the week ending August 29 ticked higher from 204K to 206K, above estimates of 205K. Other data showed that business activity in the services sector improved, with the ISM Services PMI in August coming at 5.4, up from 54.1, crushing estimates of 54.3

Digging into the details of the ISM Services PMI report, input costs rose to their highest level since May 2022, in part attributed to the energy prices. Meanwhile, the employment subcomponent remained in contractionary territory.

Banxico’s Heath: Next rate cut in about a year

In Mexico, Consumer Confidence s.a. was 46.1 in August, up from 45, but it was mostly ignored by market participants. On Wednesday, the Bank of Mexico (Banxico) Deputy Governor Jonathan Heath warned that Banxico should not cut rates in the near term, adding that a resumption of the easing cycle may be about a year away.

Heath commented, “Where we are now, it is appropriate to stop.” In Banorte’s podcast. He will support a rate cut if core inflation converges to the Mexican central bank’s 3% goal.

Ahead, the US economic docket will feature August’s Nonfarm Payrolls and Unemployment Rate update. Besides this, traders eye speeches by Cleveland Fed Beth Hammack.

USD/MXN Price Forecast: Technical outlook

In the daily chart, USD/MXN trades at 16.9254, extending its decline beneath the clustered simple moving averages (SMA) pack now grouped around 17.2648. Price holding below this triple SMA structure and under the descending trend-line framework drawn from 18.1651 and 21.0808 keeps the near-term bias bearish, even as the Relative Strength Index (14) at 33.25 hovers just above oversold territory and hints that downside momentum could be slowing rather than reversing.

On the topside, initial resistance is seen near the recent interaction with the shorter-term descending trend line around 17.0838, ahead of the triple SMA barrier at 17.2648, while a stronger cap emerges closer to the long-term trend-line proxy near 18.1200. With no clear structural floors defined in the current dataset, the pair remains vulnerable to further slippage, and only a sustained recovery above the 17.2648 SMA cluster would start to ease the bearish pressure on USD/MXN.