The EUR to MXN exchange rate is currently bearish, trading at near 90-day lows.
Key drivers include:
- Interest Rate Differential: The European Central Bank (ECB) has paused interest rate hikes, while forecasts suggest the Mexican central bank might maintain its rates, impacting the euro's relative strength against the peso.
- Global Economic Sentiment: Heightened geopolitical tensions and an ongoing war in Ukraine continue to create uncertainty in the Eurozone, weighing on the euro.
- Inflation Outlook: Despite ECB's warnings about the euro's strength potentially curtailing inflation, elevated energy prices from volatile oil markets remain critical influences on price stability in Europe.
Over the next 1–3 months, the EUR/MXN exchange rate is expected to fluctuate within a relatively narrow range, dictated by these macroeconomic factors and global trends.
Upside risks include potential positive shifts in eurozone growth forecasts or improved economic sentiment. Conversely, a downside risk could arise from a decline in consumer confidence in Europe or unexpected rate cuts from the Mexican central bank.
