But their is a better chance they don't
Whereas the FOMC is 100% expected to hike rates by 25 basis points at Fed Chair Yellen's final meeting, the Mexican central bank is expected to match the rise. However, in a Reuters poll of economists 17 of 31 (55%) expect a hike. The implied probability in the market puts the odds a bit higher at 71.4%.
The decision for the Fed will be on Wednesday while the Mexican central bank will make their decision on Thursday.
Looking at the daily chart of the USDMXN above, the pair has been moving back higher over the last few weeks. There is risk that NAFTA will fail. That should be more bearish for the MXN. If the Fed starts to tighten more, it could also strengthen the USD versus the MXN.
Technically, the pair is back above the 100 and 200 day MAs. At the end of November, the price stalled a fall near the 200 day MA. It has been stepping higher since that lows. The pair trades at the highest level since November 21.
On the topside, the pair has moved above the 38.2% of the move down from the January high at 19.19703, but momentum has faded. Buyers will need to see that level broken (and stay broken) to find more buyers.
The question this week is, "Will the Mexican central bank match the Fed's move when it meets on Thursday?" The odds say, it should happen and that should keep gains in the USDMXN under wraps. However, if they surprise and don't, the 38.2% at 19.197 will likely be broken.
