• Mexican Peso weakens as higher-than-anticipated US inflation figures might deter Fed from easing policy
• Rising US Treasury yields and a strengthening US Dollar contribute to Peso depreciation.
• USD/MXN's ascent underscores heightened economic vigilance, with traders eyeing potential moves towards the 17.00 mark.

The Mexican Peso depreciated against the US Dollar following the release of an inflation report in the United States (US) on Wednesday. Prices in the largest economy in the world were higher than expected, prompting traders to price in two interest rate cuts instead of three in 2024 from the Federal Reserve (Fed). The USD/MXN trades at 16.50, a new two-day high, and gains 0.78%.

US data was the driver of price action in the USD/MXN pair. The US Bureau of Labor Statistics (BLS) revealed that March’s Consumer Price Index (CPI) was unchanged in three of the four inflation readings, while the headline CPI exceeded estimates and February’s number.

After the data, US Treasury yields rose, the Greenback climbed, and US equities tumbled. The Chicago Board of Trade’s (CBOT) fed funds rate futures have priced in two rate cuts throughout the full year, with December’s contract projecting the Fed will ease policy to 4.95%.

The USD/MXN jumped from around 16.30 and reached a daily high of 16.52 before stabilizing at current exchange rate levels. Therefore, the Mexican Peso remains pressured, and a daily close above 16.50 could pave the way for a correction to 17.00.