"The Mexican peso began the week with a significant appreciation against the U.S. dollar, supported by a more favourable international environment for risk assets. The local currency broke below the psychological level of 18.00 pesos per dollar, reaching lows not seen since July 2024, reflecting a combination of external and domestic factors that have bolstered its recent performance. One of the main catalysts has been the broad-based weakness of the U.S. dollar in global markets."
"This backdrop has encouraged carry trade inflows into Mexico, taking advantage of the still-wide interest rate differential. Local macroeconomic stability and the perception of lower risk have reinforced these strategies, boosting demand for the Mexican currency in foreign exchange markets. On the bilateral front, the resolution of trade tensions between Mexico and the United States has also supported the exchange rate. From a technical perspective, the USD/MXN pair maintains a well-defined bearish bias following the break of key levels."
The Mexican peso appreciated sharply, falling below 18.00 pesos per dollar to levels not seen since July 2024, driven by external and domestic factors. A broad-based weakening of the U.S. dollar amid expectations of a less restrictive Federal Reserve reduced the greenback's appeal and spurred carry trade inflows into Mexico, exploiting a wide interest-rate differential. Local macroeconomic stability and lower perceived risk reinforced demand for Mexican assets. Resolution of Mexico–U.S. trade tensions improved the outlook for trade and investment and lowered risk premiums. Technicals show a bearish USD/MXN trend, though nearby support could prompt consolidation or rebounds; key U.S. data and the next Banco de México decision may drive volatility.
Read at London Business News | Londonlovesbusiness.com
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