The EUR to MXN exchange rate has displayed stability in recent months, currently at 21.47, which is just 0.7% below its three-month average of 21.63. The rate has remained within a narrow range of 21.27 to 21.95, indicating limited volatility. Analysts attribute this stability in part to the muted tone prevailing in the currency market, influenced by recent economic data from the Eurozone.
The European Central Bank (ECB) has been a significant factor affecting the euro's value. Recent forecasts suggest that if ECB President Christine Lagarde maintains a hawkish tone in upcoming speeches, this may bolster the euro further. However, the Eurozone’s economic indicators present a mixed picture, with the Composite Purchasing Managers' Index (PMI) signaling a slight contraction in business activity in October 2024. As the Eurozone contends with slow economic growth and inflationary pressures, analysts anticipate that ECB interest rate decisions will be closely watched for any signs of a more aggressive monetary approach.
On the other side, the Mexican peso (MXN) faces its own set of challenges. The imposition of tariffs by the U.S. on Mexican imports remains a concern, contributing to volatility in the MXN. The recent interest rate decisions by the Bank of Mexico (Banxico), which held rates steady at 11.00%, reflect a dovish stance that has generally pressured the peso against the dollar and, by extension, against the euro.
Moreover, the geopolitical landscape, particularly the ongoing conflict in Ukraine, has implications for oil prices, which are influential in determining currency movements. The most recent oil price data indicates that oil is trading at $64.44, approximately 2.3% below its three-month average. The volatility in oil prices, trading in a 15% range from $60.96 to $70.13, continues to impact currencies reliant on oil exports and imports, including the euro and the peso.
As the Eurozone grapples with economic recovery amid geopolitical uncertainties, the strength of the euro against the Mexican peso will largely depend on ECB monetary policy, the economic health of major Eurozone nations, and external factors affecting both economies. In the meantime, stakeholders are advised to closely monitor these developments, as fluctuations could present opportunities for favorable international transactions.
