In the last column we saw that the dollar climbed to 900, after treasury sales. So far this year, the situation has not been different in the sense that we continue to see (additional) sales by the Budget Directorate (DIPRES) but with the caveat that we are in the vicinity of 970. we are in the vicinity of 970. In this context, it is worth pausing for a minute to analyze other factors that are currently becoming more predominant.

With the Central Bank of Chile lowering rates by 100 bps in the last meeting in January (accumulated 400 points since it started the process in July last year), and the FED postponing expectations to begin its reduction, it is not unusual to see that the effect of the sale flows of DIPRES and the Central Bank are almost negligible in the face of local and foreign buying, it is not unusual to see that the effect of the sale flows of DIPRES and the Central Bank, are almost negligible before the purchase of both locals and foreigners.

However, this spread between the local rate and the USD rate, which has been compressing, will not be reduced forever. Therefore, the game will continue until we have clarity on the start of the Fed rate cut and also discount the level where the Central Bank should take the rates. This scenario is not fully resolved today, but seeing technical levels may bring some clarity when this is resolved, assuming that markets generally tend to anticipate.

In that sense, and from the current 970 pesos, as long as we do not reach again below 950 pesos, the immediate trend is to the vicinity of 995-1000. It should be noted that much of the price action of the last few days was the result of stop losses of short positions. This explains that in the event of a higher inflation figure than expected by the market, buying would follow, with very little offerwhich goes against the expected fundamental movement.

In accordance with the above, it is important to highlight that the proposed technical levels are not inevitable, but rather translate into milestones on our roadmap to see where we are in terms of higher order movements.

Gustavo Gallardo, CMT

Sales and Trading Deputy Manager Fynsa