The Mexican Peso (MXN) depreciates following the release of mid-month April inflation data. While headline inflation exceeded expectations, a deceleration in core CPI tempers the initial reaction, shifting investor focus to broader market dynamics.

Key Factors:

• Inflation Picture: Rising headline inflation suggests persistent price pressures, though the core CPI figure, in line with forecasts, provides some relief.
• USD/MXN Technical Shift: The break below the key 17.00 level signals a potential reversal in the short-term uptrend, favoring a bearish bias for USD/MXN.

Technical Analysis: Bearish Signals Emerge

• Key Support Levels: Initial support lies at 16.86, reinforced by a major Moving Average. A break below could lead to further declines targeting 16.50 and April 9 lows near 16.26.
• Bullish Revival: A decisive break above the major downtrend line near 17.45 would signal a bullish shift, with an upside target at roughly 18.15. Look for specific technical confirmations, such as a large green candlestick or three consecutive green closes.

Outlook:

While inflation data remains a factor, the technical breakdown in USD/MXN suggests a period of potential weakness for the pair. Pay close attention to the key support levels and potential bullish reversal signals.