• USD/MXN experienced losses as the US Dollar dropped on weaker inflation.
• Weaker US inflation reinforces the prevailing sentiment of concluding the rate-hike cycle by the Fed.
• Banxico Governor Rodriguez mentioned the possibility of rate cuts on easing the inflationary outlook.

USD/MXN attempts to recover recent losses, trading higher around 17.3500 during the Asian session on Wednesday. However, the USD/MXN pair suffered losses as the US Bureau of Labor Statistics (BLS) revealed weaker inflation data on Tuesday.

US Consumer Price Index (CPI) for October eased to 3.2%, falling short of the anticipated 3.3%. The US Core CPI rose to 0.2%, below the expected 0.3%. The softer inflation figures further support the prevailing sentiment that the US Federal Reserve (Fed) is inclined to conclude its rate-hike cycle. This has triggered a downward rally in US Treasury yields, consequently undermining the strength of the US Dollar (USD).

The Bank of Mexico’s (Banxico) Governor Victoria Rodriguez Ceja mentioned the room for discussing rate cuts due to the easing inflationary outlook. She mentioned that any monetary policy loosening could be gradual and a data-dependent approach will be taken in decision-making.

Banxico's maintained interest rates at 11.25% depending on the context of Mexico's inflation, which grew at 4.26% year on year in October, lower than anticipated. The commitment of Mexico’s central bank to achieving its 3.0% inflation target by the year 2025, indicates maintaining policy rates at their current level for quite some time.

Traders will likely watch the US Producer Price Index and Retail Sales data on Wednesday to gain further indications on the Fed’s monetary policy in the December meeting.