USD/MXN gains ground due to increased risk aversion despite the dovish Fed.
The US Dollar may limit its upside due to rising speculation of the Fed deducting rates in September.
IMF has revised Mexico’s GDP growth expectations for 2024 from 2.4% to 2.2%.
USD/MXN extends gains for the second successive session, trading around 17.70 during early European hours on Thursday. The US Dollar (USD) rebounds amid increased risk aversion, driven by improved US Treasury yields, underpinning the USD/MXN pair.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against the six other major currencies, trades around 103.80, with yields on 2-year and 10-year US Treasury bonds standing at 4.45% and 4.17%, respectively, at the time of writing.
However, the US Dollar may limit its upside due to the high likelihood of a rate-cut decision by the Federal Reserve (Fed) in its September policy meeting. According to CME Group’s FedWatch Tool, markets now indicate a 93.5% probability of a 25-basis point rate cut at the September Fed meeting, up from 69.7% a week earlier.
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