Banxico minutes signal more easing ahead as economy slows

• Banxico board sees increased economic slack and downside inflation risks, reinforcing expectations for more rate cuts.
• Majority noted orderly MXN trading and improving liquidity conditions despite external volatility.
• USD/MXN could test 20.00 if support at 20.30 breaks; upside risk only resumes above 20.50.

On Thursday, April 10, Banco de Mexico (Banxico) released its latest meeting minutes, in which all board members stated that the Mexican economy is slowing down amid an evolving disinflation process, which paves the way for further easing.

Banxico's meeting key quotes:

Board estimates that looking ahead it could continue calibrating the monetary policy stance and consider adjusting in similar magnitudes.
Majority of board members said the economy is expected to show increased slack.
Most board members said MXN trading conditions remained orderly and even showed improvements during the period.
Majority stated balance of risks to economic activity is biased to the downside.
Most indicated that risks to downside for inflation have gained relevance.
Majority of board said the expected weakness of economic activity and greater slack conditions will contribute to continuation of disinflation process.
One board member said flash estimate for February suggests the contraction will extend to that month.
A scenario of high and permanent tariffs on all US imports from Mexico is unlikely to materialize.

USD/MXN Price Forecast: Technical outlook

Even though the USD/MXN remains upwardly biased, a drop below the 20.30 area could pave the way for further losses. The next key support level lies at 20.00, followed by the 200-day Simple Moving Average (SMA) at 19.83. If surpassed, the next stop would be 19.50. Conversely, a bullish continuation looms if buyers push the pair past the 20.50 area, with the 21.00 figure next.