• USD/MXN has defended its crucial support of 18.00 amid a recovery in the USD Index.
• US consumer spending is to be impacted this year amid fears of a recession and tremors in the banking industry.
• A 25bp rate hike is expected from Banxico to 11.25%.

The USD/MXN has witnessed a marginal decline to near 18.10 in the Asian session after a recovery move. The asset has defended the psychological support of 18.00 amid a recovery move by the US Dollar Index (DXY). The USD Index is juggling near the previous day's high around 102.77. The mighty USD is gathering strength to deliver a break above the same in hopes that the Federal Reserve (Fed) will hike rates one more time this year.

S&P500 futures have trimmed losses shown in the Asian session, portraying further improvement in the risk appetite of the market participants. Receding fears of further casualty in the US banking system have weighed on demand for US government bonds. Eventually, the 10-year US Treasury yields jumped to 3.58%.

Going forward, the release of the United States core Personal Consumption Expenditure (PCE) Price Index data will remain in the spotlight, which is scheduled for Friday.  As per the consensus, households’ spending increased by 0.4% in February lower than the prior escalation of 0.6%. The annual core PCE price index is expected to remain steady at 4.7%.

The National Retail Federation (NRF) said on Wednesday that fears of a recession and tremors in the banking industry cast a shadow over a recovery in consumer spending, as reported by Reuters. The NRF is expecting a growth in retail demand in the 4-6% range, lower than expansion by 7% recorded in 2022. Therefore, chances of a better-than-anticipated core PCE are less likely.

On the Mexican Peso front, investors are awaiting the interest rate decision by the Bank of Mexico (Banxico). As per the consensus, Banxico will hike interest rates further by 25 basis points (bps) to 11.25%.