Mexican Peso retreats as USD/MXN bounces from near YTD low

The Mexican Peso lost ground against the US Dollar as USD/MXN rebounded from near its year-to-date low of 17.10 to trade around 17.15, gaining over 0.09%. The pair's upward momentum was primarily driven by broad US Dollar strength and a souring market mood ahead of the Federal Reserve's monetary policy decision. Strong US economic indicators, including headline PPI surging to 5.4%, solid Nonfarm Payrolls, and rising energy costs with oil trading above $100, have led investors to price in a potential Fed interest rate hike into the 3.75%-4.00% target range. In contrast, the Bank of Mexico has maintained its benchmark rate at 6.50% since concluding its easing cycle in May. Mexico's 12-month inflation rate recently moderated to 3.26%, near the central bank's 3.0% target. Technically, USD/MXN remains constrained beneath key moving averages at roughly 17.18 despite the bounce, while key downside support is located at 16.89, defining the immediate trading range.