- The Mexican weight breaks a four -day streak of profits as the feeling of risk deteriorates.
- The discouraging consumer confidence in Mexico adds pressure to the weight as the perspective worsens for next year.
- The fears of recession in the US intensify while Trump evades questions about the economic slowdown.
- Despite the weakness of the USD, the flows to safe shelters harm emerging market currencies such as weight.
The Mexican peso depreciates against the US dollar on Monday, breaking four consecutive losses against the currency of emerging markets, while investors expect the publication of crucial inflation figures in the United States (USA). Meanwhile, the deterioration of consumer confidence in Mexico weighed on the peso, which has risen 2.60% against the dollar so far in 2025. The USD/MXN quotes at 20.31, with an increase of 0.31%.
A discouraging market mood promotes the USD/mxn exchange rate up for the fears of a recession in the US.
To the south of the border, the confidence of the consumer revealed by the National Institute of Statistics and Geography (INEGI) showed that consumers continue to become pessimistic about the current economic situation and about the country’s perspective in the next 12 months.
Meanwhile, the fears that the US economy can fall into a recession or in a stagflation scenario keep investors inclined towards currency refuge to the detriment of emerging market currencies (EM) such as weight.
Despite this, the dollar extended its losses compared to most of the G10 currencies. The American dollar index (DXY) that tracks the performance of the dollar against a basket of six other currencies, fell 0.14% to 103.76.
This week, Mexico’s economic agenda will include industrial production data. In the US, the calendar will reveal the Jolts employment offers data on Tuesday, followed by the publication of the Consumer Price Index (IPC) on Wednesday.
What moves the market today: the Mexican peso pressed by the US commercial rhetoric.
- Consumer confidence in Mexico fell from 46.6 to 46.3, INEGI revealed.
- These data, together with the ongoing disinflation process in Mexico, despite the recent increase in general and underlying prices, suggest that the Bank of Mexico (Banxico) could cut interest rates at the next meeting of March 27.
- The Banxico Private Economists Survey showed that general inflation is expected to end 3.71%, while the underlying IPC is expected to end at 3.75%. It is projected that the USD/MXN exchange rate ends at 20.85 in 2025, slightly below the 20.90 projection in the previous survey. However, by 2026, they anticipate a more pronounced depreciation of the weight, well above the level of 21.30 expected in the January survey.
- The New York Fed feeling Survey revealed that inflation expectations for one year in February increased from 3% to 3.1%. For periods of three and five years, they remained unchanged in 3%. Americans expect price increases in gasoline, rental and food.
- A Reuters survey showed that 70 of 74 economists say that the risk of recession has increased in the US, Canada and Mexico.
- The expectations that the Federal Reserve would relax politics have increased due to the fears of recession. Market participants estimate 80 basic relaxation points towards the end of the year, revealed data from the Chicago Commerce Board.
- In the operating room, commercial disputes between the US and Mexico are still the center of attention. If countries could reach an agreement, it would pave the way for a recovery of the Mexican currency. Otherwise, a greater increase in USD/MXN is expected, since US tariffs could trigger a recession in Mexico.
Technical perspective of the USD/MXN: The Mexican weight weakens as the USD/MXN exceeds 20.30
The USD/MXN quotes laterally, unable to break the range of 20.20-21.00 over the last five weeks. However, at the time of writing, the operators are testing the simple mobile average (SMA) of 100 days in 20.34, which if it breaks, would pave the way to try 20.50. If it is exceeded, the next key resistance levels would be the peak of March 4 in 20.99 and the peak of the year to date (YTD) of 21.28.
On the contrary, if the USD/MXN exceeds the support of 20.20, the next floor would be the figure of 20.00, before challenging the 200 -day SMA in 19.59.
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.
