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\n Share:<\/span><\/p>\n The Mexican Peso (MXN) recovered some ground against the US Dollar (USD) on Thursday, although Mexico\u2019s economy deflates while the US jobs market remains tight. Hence, the USD\/MXN is trading at 17.5300, a loss of 0.30%, after hitting a daily high of 17.7074.<\/p>\n The Instituto Nacional de Estadistica Geografia e Informatica (INEGI) revealed that inflation in Mexico dropped to its lowest level since March 2021, at 4.64%, as expected by market analysts. Core inflation, which excludes volatile items, slowed sharply to a 20-month low in August at 6.08%, below the foreseen 6.12%.<\/p>\n Jonathan Heath, a Deputy Governor of the Bank of Mexico (Banxico), said in social media X that core inflation was \u201cgood news\u201d while adding, \u201cThere is still a long way to go.\u201d Recently, some Banxico officials stressed the need to maintain higher rates as the central bank curbs inflation.<\/p>\n Across the border, the US Bureau of Labor Statistics (BLS) revealed that unemployment claims rose by 216K, beneath 229K forecasts on the week ending September 2, flashing a tight labor market. Even though the Greenback (USD) appreciated against most G8 currencies on the news<\/a> release, the Mexican Peso outweighed the former, as the USD\/MXN continued to trend downwards.<\/p>\n Fed officials have become more neutral, as data suggests prices are cooling down. But the resilience of the US jobs market puts the US central bank at a crossroads between doing too much and triggering a recession or perhaps under-tightening and suffering the consequences of an acceleration of inflation.<\/p>\n Meanwhile, the CME FedWatch Tool depicts money markets have fully priced in the Fed will keep rates unchanged in September. But for November, chances of a 25 bps increase lie at 43.5%.<\/p>\n Given the recent developments in both economies, the USD\/MXN is set to print more gains, though it would face strong resistance at 18.0000. Any hawkish surprises by the Fed<\/a> and next year\u2019s Mexico general election could trigger outflows from the emerging market currency.<\/p>\n From a technical standpoint, the USD\/MXN is neutral to upward biased. Still, today\u2019s pause could spur some consolidation as bulls recharge batteries to challenge the 18.0000 psychological figure. Even though a pin-bar is forming, a daily close below September\u2019s 6 low of 17.3912 could pave the way for a deeper correction. Otherwise, a break above 17.7074 and the pair could reach 18.0000.<\/p>\n\n
Mexican Peso gains against the US Dollar despite a strong US labor market, as inflation in Mexico drops<\/h2>\n
USD\/MXN Price Analysis: Technical outlook<\/h3>\n