- The USD/MXN falls to a minimum of 10 months while the US dollar extends its losses.
- Commercial conversations between the US and Mexico are ongoing, with both nations supposedly involved in advanced discussions.
- Fiscal uncertainty in the USA weighs on investors and dollar confidence.
The Mexican weight (MXN) is being negotiated at its strongest level in 10 months against the US dollar (USD) on Wednesday, supported by a feeling of risk in improvement and trade negotiations between Mexico and the United States.
At the time of writing, the USD/MXN is around 18.90, extending its downward trend of several weeks while investors respond to changing tax and commercial dynamics.
The testimony of the US Treasury Secretary, Scott Bessent, before the Chamber’s Media and Arbitration Committee has once again focused attention on US fiscal policy, with legislators discussing the sustainability of the extension of tax cuts and introducing tariffs of “revenge tax” aimed at foreign companies. Fiscal uncertainty, combined with structural deficits, is weighing on the US dollar in general.
Meanwhile, commercial conversations between the US and Mexico are ongoing, with both nations supposedly involved in advanced discussions to relieve 50% tariffs imposed by the US to global steel imports earlier this month.
A quota -based system is being considered, which would allow a definite volume of Mexican steel to enter the US at a reduced tariff or tariff -free rate.
However, no formal framework has been completed, and critical details – including the size of the fee and the rate thresholds – are still in negotiation.
Tensions increased after the tariff rate increased from 25% to 50% on June 4, which led Mexico to request an exemption last Friday.
Officials have warned of retaliation tariffs if an agreement is not reached in the next few days, keeping market participants alert to the volatility driven by holders.
Daily summary of the Mexican weight: main market drivers
- President Donald Trump announced in Truth Social on Wednesday that “our agreement with China is made, subject to the final approval with President XI and with me.” He said that US would impose tariffs of 55% to Chinese products, while China would maintain their 10% tariff to US products.
- The US Consumer Price Index (CPI) was softer than expected on Wednesday. General inflation rose 2.4% year -on -year in May, slightly below the 2.5% prognosis and above 2.3% in April.
- The underlying IPC, which excludes food and energy, remained stable in 2.8%, without complying with the expectations of a 2.9%increase. In monthly terms, the CPI increased only 0.1%, below the 0.2%estimate, while the underlying IPC also rose 0.1%, well below the 0.3%prognosis.
- The industrial production data of Mexico on Wednesday showed a monthly increase of 0.1% in April after a 1.2% contraction in March. The annual rate showed a 4% contraction, after an increase of 1.9% in March.
- The inflation data of Mexico on Monday rose to 4.42%, exceeding the 3% objective ± 1% of Banxico, which generated caution.
- However, in a survey published by Reuters on Wednesday, most analysts still expect a rate of 50 basic points at the June 26 meeting, which would reduce the reference rate to 8.0% despite the increase in inflation.
The USD/MXN breaks below the psychological support of 19.00
The Mexican peso extended its recovery against the US dollar on Wednesday, with the USD/MXN falling below the critical support in the 61.8% fibonacci setback of the rebound from July to February on 19.01, confirming a bearish continuation pattern. The pair is now negotiated about 18.90, marking its lowest level since August 2024, and almost 3% falling this month.
This last downward movement follows repeated rejections in the simple mobile socks (SMA) of 10 days and 20 days, currently in 19.17 and 19.25, which have acted as dynamic resistance since the beginning of May. With the impulse firmly down, the peso continues to surpass the dollar in the midst of a favorable macroeconomic feeling and optimism around a possible commercial resolution between the US and Mexico.
A decisive daily closure below 18.60 could pave the way to 18.40, with the downward impulse probably accelerating if US treasure yields go back even more or if Banxico indicates confidence in flexible policy without endangering inflation control.
That said, risks of short -term bundle bouncing are emerging, with the relative force index (RSI) around 30, indicating overall conditions that can trigger consolidation or a corrective rebound. A recovery above 19.01 would help neutralize the immediate bearish impulse, but a sustained breakup is required above the 20 -day SMA in 19.25 to indicate a broader reversal. If this level is exceeded, additional upward objectives are presented in 19.44 and 19.57, where key levels of Fibonacci and mobile socks converge.
USD/MXN daily graphics
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.
