EUR/MXN Outlook:
The EUR/MXN exchange rate is currently below its 90-day average and near recent lows. This suggests a bearish outlook, influenced by ongoing geopolitical tensions impacting the euro and a relatively stable environment for the peso.
Key drivers:
- Rate gap: The Bank of Mexico has kept interest rates steady at 7%, while the European Central Bank holds rates at 2%, widening the gap that favors the peso.
- Risk/commodities: With oil prices significantly above their recent average, the euro could weaken as higher energy costs may dampen economic recovery in the Eurozone.
- One macro factor: Concerns surrounding the ongoing Russia-Ukraine conflict continue to weigh on the euro, creating uncertainty in the Eurozone economy.
Range:
Expect the EUR/MXN to drift within its recent range, possibly testing lower extremes if current pressures persist.
What could change it:
- Upside risk: A surprising improvement in German consumer confidence could support the euro.
- Downside risk: Further escalation of the Russia-Ukraine war may lead to heightened volatility and depreciation of the euro.
