- The USD/MXN rises 0.22% to 20.52 while tariff fears weigh on the feeling.
- Mexico’s commercial deficit is expanded and unemployment increases, adding economic concerns.
- Banxico’s moderate position and US commercial policies could push the USD/MXN around 21.00.
The Mexican weight (MXN) extended its agony and depreciated against the US dollar on Friday, with weekly losses greater than 0.59% since the US president, Donald Trump, emphasized that tariffs on Mexico will advance on March 4. The USD/MXN is quoted at 20.52, with an increase of 0.22%.
The emerging market currency is still pressed by US commercial policies that will be implemented next week. The data of the current week of Mexico showed that the commercial balance registered a deficit in January, in contrast to the December surpluses. Meanwhile, the unemployment rate rose two tenths, which could affect economic growth.
The operators continued to tell President Trump’s tariffs, saying that 25% tariffs on Mexico and Canada would begin next week, along with an additional 10% about China. Meanwhile, the Mexican Secretary of Economy, Marcelo Ebrard, will meet with the commercial representative Jamieson Ger on Thursday and with the Secretary of Commerce Howard Lutnick on Friday.
On the other side of the border, the preferred inflation indicator of the Federal Reserve (FED), the Personal Consumption Expenditure Index (PCE), decreased annually, showing progress in the monthly and annual figures.
Given the fundamental background, the USD/MXN torque could rise in the short term. Commercial policies, geopolitics and moderate posture of Banxico could push the pair to challenge the level of 21.00.
The president of the Fed of Cleveland, Beth Hammack, declared that an increase of rates is not planned and added that the potential economic impact of the tariffs and how they could influence monetary policy is uncertain.
Daily summary of market movements: Mexican weight navigates in calm waters as the Trump tariff deadline approaches
- The weight remains in the discussions between Mexican and American officials in Washington.
- The trade balance of Mexico experienced a more pronounced deficit than the 3.8 billion expected dollars in January. It was extended to 4.55 billion dollars after maintaining a surplus of 2,576 billion dollars in December.
- The unemployment rate in Mexico increased 2.7% as expected in January, compared to 2.4% of December.
- The Personal Consumption Price Index (PCE) of the US, the Fed’s preferred inflation indicator, rose 0.3% intermensual in January, fulfilling expectations and accelerating since December. In interannual terms (yoy), the underlying PCE was reduced to 2.6%, from 2.9% of December.
- The general inflation in the US expanded 2.5% year -on -year, in line with forecasts but slightly less than 2.6% of December. Monthly, it remained unchanged at 0.3%, as projected.
- Swaps markets suggest that the Federal Reserve could make policy more flexible at 58 basic points, compared to 70 PB last week in 2025, according to data from the Chicago Commerce Board (CBOT).
- Commercial disputes between the US and Mexico are still the center of attention. Although countries found a common land previously, USD/MXN operators should know that the 30 -day break is about to finish, and tensions could trigger volatility in the pair for the rest of the week.
Technical perspective of the USD/MXN: The Mexican weight falls while the USD/MXN exceeds the 50 -day SMA
The USD/MXN maintains a bullish bias and a rupture above the single mobile average (SMA) of 50.45 would pave the way for a thrust towards 20.50. The relative force index (RSI), now above 50, reached its highest level in February, pointing out a strong bullish impulse. Buyers will seek to exceed the maximum of January 17, 20.93, followed by 21.00 and the maximum of the year to date (YTD) of 21.28.
In the lower part, the inability to stay above the 50 -day SMA could trigger a setback towards the 100 -day SMA in 20.24. A greater weakness could be observed in the torque if it breaks below this dynamic support, potentially putting the psychological level of 20.00.
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.
