Central Bank Of Mexico Surprises Market And Cuts Rates By 25bps

By Joseph Perry of Forex.com

Global Head of Business Development at Forex.com • Aug 15, 2019 at 5:36 PM EDT

The Central Bank of Mexico cut overnight interest rates by 25bps, to 8.00%. The consensus was for unchanged and it was the first time the Central Bank cut rates since 2014.

The Central Bank of Mexico cut overnight interest rates by 25bps, to 8.00%. The consensus was for unchanged and it was the first time the Central Bank cut rates since 2014. One board member voted to keep rates unchanged at 8.25%. Members cited geopolitical risks and worries over a global slowdown as reasons for the rate cut.

USD/MXN spiked immediately to a high of 19.7624, however, has reversed aggressively and has since pulled back toward 19.6000.

There is a short-term resistance zone at 19.7500/19.7700. This area has been rejected 5 times since Monday and may continue to act as important resistance in the short term.

(Click on image to enlarge)

Source: Tradingview, FOREX.com

However, a longer-term daily chart shows that price action has been stuck in a symmetrical triangle since April 2018, between the roughly 18.00 and 21.00.

(Click on image to enlarge)

Source: Tradingview, FOREX.com

As we are coiling towards the apex of this triangle, note the approximate breakout levels of the triangle, which are currently 20.00 on the upper trendline, and 19.00 on the lower trendline. A breakthrough either of these trendlines may determine the next long-term direction for USD/MXN.

Disclaimer:

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read

Characteristics and Risks of Standardized Options

.

STOCKS IN THIS ARTICLE

Also Mentions:

Comments

Back to all articles