The peso continued to strengthen today even after a surprise jump in US jobs creation. It was also one of the few currencies to do so as the DXY gained 0.50% immediately after the news.

Non-Farm Payrolls showed a higher-than-expected level of job creation. Today’s number came in at 303k, while forecasts had the number at 200k. That’s a considerable surprise and shows the economy is still experiencing healthy economic growth.

The big question remains, will it be enough to change the Federal Reserve’s stance on its monetary policy? We shall see, but for now it looks like the market wants to wait until Monday at least.

Not so for the USD/MXN, where the peso has been gaining all day against the dollar and not even the surprise in Non-Farm Payrolls was enough to change the direction of this FX pair. Next week we’ll get a better idea of where the dollar is heading.

If the previous sentiment of an easing monetary policy from the Fed and weakening dollar returns. Or if the market decides that today’s employment figure was enough to put the Fed on watch and possibly delay the first interest rate cut.

Next week we get inflation figures from the US on Wednesday and Mexico on Tuesday that may give us more ideas. Core inflation is expected to drop for both countries while overall inflation is expected to rise slightly.

Technical View

The day chart below shows how the Mexican peso has continued to strengthen throughout the day. Without much regard for the large surprise in job creation from the US. Today’s candle is about to fully break the consolidation area (blue & yellow area).

If today’s candle closes below the support area 16.5088 (blue line), we have a set up that most likely would take us towards the next support area (red line) at 16.3738. This is a major support area that was set back in October 2015.

Also significant is the fact that from that low in 2015 the market then rallied to its all-time-high at 25.7782 over the next 5 years. We may also see a correction next week, something typical after a breakout. That retracement should find resistance at 16.5088 (blue line).