Mexican Peso edges lower as solid US jobs boost the USD

The Mexican Peso (MXN) experienced a slight decline against the US Dollar (USD) on Thursday due to strong American economic data revealing a robust jobs market and persistent inflation above the Federal Reserve's (Fed) 2% target. This situation encourages higher interest rates, which is a favorable factor for the US currency. The USD/MXN pair traded near 16.97, marking a 0.09% increase.

The Mexican currency has struggled to gain momentum over the past four trading sessions, potentially awaiting Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole event on Friday. Currently, solid economic data from the United States is keeping the USD/MXN exchange rate within its usual range. US figures indicated that jobless claims for the week ending August 22 were below expectations, with a count of 203K, confirming a strong labor market.

Meanwhile, the US trade deficit expanded, but the US Dollar remained stable, as evidenced by the US Dollar Index (DXY), which is currently flat at 99.14. Market participants are closely watching Federal Reserve Chair Kevin Warsh's remarks at Jackson Hole on Friday, as his statement could influence the USD/MXN exchange rate. If Warsh adopts a hawkish stance, it may push the USD/MXN pair above 17.00, potentially leading to further gains.

However, the pair could retest the yearly low of 16.90. In the daily chart, USD/MXN is currently trading at 16.9782, indicating a bearish near-term outlook due to its position below the triple simple moving average cluster (50, 100, and 200-day SMA) at 17.3142 and a descending resistance trend line derived from 18.1651, which now suggests a possible rebound around 17.3487.

The latest 14-day Relative Strength Index (RSI) at 34.55 suggests that downside momentum is still dominant but could be weakening as the pair consolidates below the mentioned moving averages. The next major support level for the Mexican Peso (MXN) is the long-term trend-line break level near 15.47. If selling continues, this level could serve as a crucial support for the MXN.

Conversely, if the economic data remains strong, higher interest rates could make the Mexican Peso more appealing to investors, leading to an increase in its value.