Despite US President Donald Trump’s threat of imposing wide-ranging tariffs on the European Union (EU), the Mexican Peso (MXN) has maintained its stability against the US Dollar (USD). As of this writing, USD/MXN is trading below the significant level of 19.30, as traders are monitoring news coming out of both Mexico and the United States.
On Friday, the National Institute of Statistics and Geography of Mexico (INEGI) released the country’s Trade Balance data for April, which showed a trade deficit of $88 million. Although this was below the $160 million forecasted by analysts, it represents a shift from the $3.442 billion surplus reported in March. At the same time, President Trump announced on his Truth Media social media platform that he plans to impose a 50% tariff on EU imports, effective June 1st. According to Trump, negotiations with the EU have been difficult and unproductive.
The US has also recently experienced significant events, such as the approval of Trump’s tax bill and a downgrade in Moody’s credit rating. These events have led to a weaker dollar, increasing demand for alternative assets. As a result, USD/MXN has dropped below 19.30 and is consolidating under the 10-day and 20-day Simple Moving Average (SMA) levels of 19.39 and 19.49, respectively. If 19.30 is surpassed, traders may look towards a testing of the May low at 19.23, indicating that sellers still control the market.
The Relative Strength (RSI) indicator is currently at 38.92, showing strong downward momentum. If the downtrend continues, a retest of the May low could bring attention to the October low of 19.11, with the next support at the psychological level of 19.00.