The Mexican peso/yen pair broke below the ¥8.50 threshold during the week, with the decline exceeding 10% at its maximum. A “mini death cross” appeared on the weekly chart as the short-term moving average fell below the medium-term average, and a full death cross is also close to forming.
Last week, the Mexican peso/yen pair broke below the ¥8.50 threshold for the first time this year and extended its decline to around ¥8.479. The decline from the 1 September high exceeded 10% at its maximum, marking a period in which the peso market has weakened.
One factor behind the peso's decline is growing expectations of a narrower interest-rate differential with the United States. The Federal Reserve raised rates in September and indicated a positive view of an additional hike within the year. Meanwhile, minutes revealed that the Bank of Mexico discussed a rate cut at its September meeting, raising the possibility that cuts could resume as early as November.
On the weekly chart, a “mini death cross” appeared as the 13-week moving average fell below the 26-week moving average. A death cross below the 52-week moving average is also considered close to forming.
The current movement suggests that the peso/yen market may be entering a bearish trend. Its future direction is expected to depend on whether the death cross forms and on movements in the interest-rate differential.