Mexican IPC Analysis: Factor Rotation and Risk-Premium Compression

The Mexican IPC index (tracked via EWW proxy) entered the January 22, 2026, session with a distinct regime-shift sentiment, characterized by risk-premium compression rather than aggressive policy repricing. As the Asia-to-Europe handover stabilized, market participants shifted focus toward factor-driven composition and breadth as the primary indicators for trend sustainability.

Market Context: Factor Rotation and Liquidity Impulse

During the London and early New York sessions, the price action suggested a constructive reopening of risk budgets. Unlike previous sessions driven by volatile interest rate expectations, front-end rates remained notably quiet (SHY -0.04%). Instead, the impulse was driven by a softer US Dollar (UUP -0.48%) and a bid in long-duration assets (TLT +0.48%), providing a marginal tailwind for Mexican equities.

Session Handover Dynamics

• Asia Close to London Open: Stability defined the overnight tape, with local players remaining sidelined pending US cash liquidity direction.
• London Morning: Trade remained orderly, avoiding the parabolic "one-way" moves that typically signal exhaustion. Participation began to broaden only as bid-ask spreads tightened.
• New York Morning: US cash liquidity acted as the ultimate catalyst, determining whether the index would embrace the global risk-on bid or revert to the mean.

Technical Level Map and Pivot Points

The microstructure analysis identifies crucial validation zones for the next 24 hours. The primary rule for current market conditions remains: buy dips only above the pivot and consider sell-side pressure only below it.

Support and Resistance Tiers

• Primary Resistance: 76.36 (High of range) and 75.70 (Psychological handle).
• Primary Support: 75.60 (Key Pivot) and 75.42 (Downside trigger).
• Invalidation Zones: Sustained moves above 76.41 or below 75.37 invalidate the current range-bound thesis.

Scenario Probabilities

Base Case: Range Extension (58% Probability)

The most likely outcome sees the index holding its current range and grinding higher, provided that volatility remains suppressed. Technical participants should watch for price acceptance above 75.70 to confirm session strength.

Upside Confirmation (17% Probability)

A clean breakout above 76.36 could spark an extension toward 76.41. Traders should view a quick reversal back below 75.70 as a failure signal for this bullish extension.

Downside Correction (25% Probability)

A breakdown below 75.42 targets the 75.37 liquidity pocket. Reclaiming the 75.60 pivot would be required to neutralize this bearish momentum.

Execution Strategies

Pullback Long Setup

• Entry: 75.66
• Stop Loss: 75.36
• Targets: 75.76 / 76.41
• Time Horizon: 1–3 business days

Breakout Momentum Entry

• Entry: Above 76.37 (confirming 76.36 breach)
• Stop Loss: 76.28
• Targets: 76.46 / 76.56

Macro Indicators to Watch

In the coming 24 hours, focus should remain on Market Breadth. Widening participation across sectors will support a continuation of this constructive regime, while narrowing participation—where the index is carried by only a few heavyweights—increases the risk of a sharp reversal.

Related Reading: Mexican IPC Analysis: Policy Uncertainty Reprices Risk Premia