USD\/COP is trading at 3,204.9, around levels last seen in July 2019, after Monday\u2019s close at 3,191.5 left the pair down 16% in roughly ten weeks; July\u2019s low stands at 3,186.3. Tuesday\u2019s move was a 0.42% rebound, while the 13-day EMA at 3,237 has capped rallies since mid-May and daily Stoch RSI is at 86.51. The 2026 high was 3,800.73 on 19 May. Ahead, the Fed decision comes tomorrow and BanRep\u2019s on Friday. The US funds rate is 3.50\u20133.75%, and CME FedWatch implies roughly a two-thirds chance of a hold versus about one-third for 3.75\u20134.00%. Headline CPI is 3.5% with core at 2.6%, while core PCE printed 3.4% in May; DXY is 101.511 after 101.640, with Stoch RSI at 99.89.<\/p>\n\n
Colombia\u2019s June inflation print from DANE shows annual IPC at 6.14%, led by restaurants and hotels at 9.59% and health at 8.39%, while alojamiento, agua, electricidad y gas was 5.02%. The largest contributions were meals at table-service and self-service establishments at 0.74pp, imputed rent at 0.62pp and urban transport at 0.51pp. Services make up 57.46% of the basket and rose 0.29% m\/m, while durables have a 4.92% weight and fell 0.12%. Year-to-date inflation is 4.77% versus 3.74% over the same 2025 period. BanRep\u2019s policy rate is 12.00% after 275bp of hikes since February, implying an ex-post real rate of 5.86% versus 6.14% inflation; key technical levels include resistance at 3,237.1 and 3,400\u20133,455, with support at 3,186.3, then 2,992.7 and 2,689.4. WTI is 81.28 against a 13-day EMA of 82.43.<\/p>\n\n—\n\n
We are watching the USD\/COP trade around 3,204.9, a level not seen since July 2019, after a steep 16% drop over the last ten weeks. Because weekly momentum is extremely oversold with the Stochastic RSI at 1.14, we expect a short-term bounce toward the 3,237 or 3,400 resistance levels. Derivative traders should use this temporary rally to set up fresh short positions rather than fighting the broader downtrend.<\/p>\n\n
The critical catalysts arrive this week with the Federal Reserve meeting tomorrow and Colombia\u2019s BanRep on Friday. Current CME FedWatch data shows a 66% chance of a rate hold at 3.50-3.75%, but a hawkish surprise would quickly boost the US Dollar Index. On the other side, we expect BanRep to push its policy rate to 12.50% to combat stubborn domestic demand.<\/p>\n\n—\n\n
While some analysts argue that Colombian inflation is just a passing energy shock, DANE’s latest reports prove that domestic services are driving the pressure. With restaurants running at 9.59% and rents adding 0.62 percentage points to the index, inflation is deeply structural. This leaves Colombia’s ex-post real interest rate at an incredibly attractive 5.86%, which will continue to support the peso.<\/p>\n\n
For options traders, we suggest using short-term call options to hedge against or profit from a quick squeeze up to the 3,237 resistance line. Once this bounce tires out, we favor buying longer-dated put options to target the major support zone between 2,800 and 3,000. Historically, periods of extreme carry like this keep the peso strong over the medium term, making rallies sellable events.<\/p>\n\n\n\n