The Mexican peso soars to three-week highs after Banxico keeps the interest rate at 11%

• USD/MXN reached 16.77, a level not seen since April 16.
• Banxico has adjusted its general inflation forecasts upwards for the next six quarters. Risks persist that warrant continued prudent management of monetary policy.
• Inflation is expected to converge with the target until the end of 2025.

The USD/MXN began the European session registering a maximum of 16.96, however, upon announcing Banxico's decision to maintain the interest rate at 11%, the Mexican Peso showed an appreciation to levels not seen in three weeks reaching 16.77 pesos per dollar

Banxico's inflation forecasts are adjusted upward for the next six quarters

He Central Bank of Mexico has decided to maintain interest rates at 11% at its monetary policy meeting in May, meeting market expectations.

According to the Banxico statement, “although the labor market has strengthened, the disinflationary process is expected to continue.” The CPI forecasts have been adjusted upwards for the next six quarters, so it is expected that the inflation target will reach its goal in the fourth quarter of 2025. In any case, these forecasts are subject to risks such as exchange depreciation , economic resilience, climate impacts and escalation of geopolitical conflicts.

Technical levels in the Mexican Peso

We observe short-term resistance in the 17.00 area, which has not been able to be overcome in the last four sessions. The first support is found at 16.67, which is a retracement to the 23.6% Fibonacci. The second support is located at 16.26, the 2024 minimum reached on April 9.

USDMXN Daily Chart