USD/MXN tumbles post US Core PCE figures, eyes on Fed's Powell

• USD/MXN falls to 16.57, as the latest US inflation report met forecasts, offering no new impetus for market shifts.
• Fed officials, including Governor Waller, signal a cautious approach to rate cuts, underlining vigilance over inflation trends.
• Investors await further guidance from upcoming Fed speeches..

The Mexican Peso (MXN) posted modest gains against the US Dollar (USD) on Friday after the release of inflation data in the United States (US). The Federal Reserve's (Fed) preferred gauge for inflation, the Core Personal Consumption Expenditure (PCE) price index, met estimates, though it failed to trigger any reaction in the financial markets. The USD/MXN trades at 16.57, down 0.31%.

USD/MXN dips as US inflation aligns with expectations

The US Bureau of Economic Analysis (BEA) reported that February's Core PCE increased by 0.3% month-over-month, coming in lower than the prior month's figures. On an annual basis, the core PCE cooled slightly from 2.9% to 2.8%, aligning with consensus estimates. The headline inflation rate for February also stood at 0.3%, below January's projections, while the year-over-year figure edged up to 2.5% from 2.4%.

Despite somewhat easing inflation, Federal Reserve policymakers remain vigilant. Other inflation metrics, such as the Consumer Price Index (CPI) and the Producer Price Index (PPI), indicate that price pressures could be anchoring above 3%.

Aside from this, traders took some cues from Fed Governor Christopher Waller. He was hawkish, emphasizing that the Fed is not in a hurry to reduce interest rates. The US economic docket will feature San Francisco Fed President Mary Daly and Fed Chair Jerome Powell at 15:20 and 15:30 GMT.

On the Mexican front, the docket will feature the Mexican Ministry of Finance's release of the fiscal balance. Traders are eyeing next week's S&P Global Manufacturing PMI for March.

USD/MXN Price Analysis: Technical outlook

The USD/MXN trimmed some of its gains today as buyers failed to conquer last year's low of 16.62. That has opened the door for a pullback, as sellers eye October's 2015 low of 16.32 ahead of challenging 16.00. On the flip side, if buyers lift the exchange rate above 16.62, that will expose January's monthly low of 16.78, followed by the March 19 high at 16.94. Next would be the 50-day Simple Moving Average (SMA) at 16.97.