• USD/MXN edges higher on Friday, though the uptick lacks any follow-through buying.
• Mexican Peso weakens slightly after Banxico Minutes indicated more interest rate cuts.
• Sustained USD buying also supports the pair ahead of Fed Chair Jerome Powell’s speech.

The USD/MXN pair attracts some dip-buying near the 18.7375 area during the Asian session on Friday, and for now, seems to have snapped a two-day losing streak. Spot prices, however, lack bullish conviction and currently trade around the 18.7665 zone, up just over 0.05% for the day.

The Mexican Peso (MXN) edges lower after Minutes from Banco de Mexico's (Banxico) August 7 policy meeting revealed a split vote within the board to reduce rates by 25 basis points (bps) to 7.75%. Moreover, the Minutes suggested further adjustments remain possible despite inflation concerns. This, along with some follow-through US Dollar (USD) buying, acts as a tailwind for the USD/MXN pair.

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, is prolonging its weekly uptrend and testing its highest level since August 5 amid diminishing odds for a more aggressive policy easing by the Federal Reserve (Fed). Traders, however, are still pricing in a greater chance that the US central bank will resume its rate-cutting cycle at its next meeting in September.

Furthermore, the CME Group's FedWatch Tool indicates the possibility of at least two 25-basis-point rate cuts by the year-end. Hence, Fed Chair Jerome Powell's speech at the Jackson Hole Symposium later today will be scrutinized closely for cues about the future rate-cut path. This, in turn, will play a key role in influencing the USD price dynamics and provide a fresh impetus to the USD/MXN pair.

From a technical perspective, spot prices remain confined in the weekly range. This further makes it prudent to wait for strong follow-through buying beyond the trading range hurdle, around the 18.8670-18.8675 area, before positioning for a meaningful appreciating move. On the flip side, weakness below the 18.6785-18.6780 zone, or the weekly low, will be seen as a key trigger for the USD/MXN bears.