- The USD/MXN falls at least seven days in 19.19.
- The US dollar weakens against the tariff vaivé of President Donald Trump and the lack of commercial agreement between the US and China.
- Trump announces that steel and aluminum tariffs will rise from 25% to 50% from next Wednesday.
- The ISM manufacturing PMI disappoints expectations in May.
The USD/MXN opened the Asian session testing a maximum of eleven days in 19.44, but throughout the day it was giving ground, until the American session fell to a minimum of a week in 19.19. At the time of writing, the par quotes about 19.21, losing an important 1.14% in the day.
The US dollar collapses at least six weeks before the tariff nonsense
The US dollar index (DXY) is suffering the consequences of the commercial war promoted by the president of the United States, Donald Trump. To the lack of agreement with China revealed on Friday when the Republican president published that the Asian giant had violated the agreement, the announcement of the rise in the tariffs to steel and aluminum from next Wednesday joins, from 25% to 50%.
Although the rise in steel tariffs would affect Mexico, the dollar loses ground against Mexican peso and in front of all its counterpartsimmersed in a nonsense of decisions around the rates since Trump took possession of his position.
To finish weakening the dollar, the PMI Manufacturing of the ISM has fallen to 48.5 points in May From April 48.7, disappointing the 49.5 expected by the market. The weakening of the sector has caused the decrease in the dollar index to 98.63, its lowest level since April 22.
USD/MXN Price levels
The Relative Force Index (RSI) remains well below 50 in short and long term graphics, supporting the bassist trend of the USD/MXN. In any case, in the hour graph, the RSI is very overendon, which could anticipate a slight rebound in the next few hours.
In case of continuing to fall, the most important support appears in the minimum of 2025 reached last week at 19.18. Below, there is an intermediate containment zone on 19.11/19.06, where are the soils of October and September, respectively.
Upwards, the initial resistance awaits in the mobile average of 100 periods in time graph, in 19.33. Above waiting 19.45, roof of May 22, and above 19.78, higher level of May registered on day 6.
Mexican weight FAQS
The Mexican weight (MXN) is the most commercialized currency among its Latin American peers. Its value is widely determined by the performance of the Mexican economy, the country’s central bank policy, the amount of foreign investment in the country and even remittance levels sent by Mexicans living abroad, particularly in the United States. Geopolitical trends can also affect MXN: for example, the Nearshoring process (or the decision of some companies to relocate the manufacturing capacity and supply chains closer to their countries of origin) is also considered a catalyst for the Mexican currency, since the country is considered a key manufacturing center in the American continent. Another catalyst for MXN is oil prices, since Mexico is a key exporter of the raw material.
The main objective of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in or close to its 3%target, the midpoint of a tolerance band between 2%and 4%). To do this, the bank establishes an adequate level of interest rates. When inflation is too high, Banxico will try to control it by raising interest rates, which makes the indebtedness of homes and companies more cooling, thus cooling the demand and the economy in general. The highest interest rates are generally positive for Mexican weight (MXN), since they lead to higher yields, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the MXN.
The publication of macroeconomic data is key to evaluating the state of the economy and can have an impact on the valuation of the Mexican weight (MXN). A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only attracts more foreign investment, but it can encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this fortress is accompanied by high inflation. However, if the economic data is weak, the MXN is likely to depreciate.
As an emerging market currency, the Mexican weight (MXN) tends to rise for periods of risk, or when investors perceive that the general market risks are low and, therefore, are eager to participate in investments that carry a higher risk. On the contrary, the MXN tends to weaken at times of market turbulence or economic uncertainty, since investors tend to sell higher risk assets and flee to the most stable safe shelters.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
