The recent performance of the EUR to MXN exchange rate indicates a period of volatility influenced by both Eurozone and Mexican economic factors. Currently trading at 21.95, the euro is just 0.7% below its three-month average of 22.1, with fluctuations mainly ranging between 21.66 and 23.08 in recent months.
Analysts have pointed out the euro's recent decline is tied to a strengthening US dollar, following a dismal showing in the Eurozone's final services PMI, which revealed that economic activity remains sluggish. Expectations of declining German factory orders and Eurozone PPI further suggest that the euro could encounter additional pressure. Interest rate speculation surrounding the European Central Bank (ECB) has also played a role, as comments about a potential pause in rate hikes contribute to uncertainty regarding the euro’s stability.
Geopolitical tensions, particularly in relation to the ongoing war in Ukraine, continue to affect the euro as well. The dollar's strength, driven by its safe-haven status amid global uncertainties, typically results in weaker performance for the euro. The broader economic conditions, such as inflation rates and energy prices, are crucial for the euro, with current prices remaining elevated and posing challenges for monetary policy.
Conversely, the Mexican peso has displayed volatility amidst fears of trade tensions with the US, especially concerning the delay of tariffs by the former Trump administration, which may affect economic relations. The announcement of negotiations between the US and Mexican governments appears to have cushioned the peso against further declines. The peso has also benefited from improvements in risk sentiment, aided by the expectation that tariffs could be eased.
As for the crude oil sector, the oil price is currently at 68.80, reflecting a 3.2% rise above its three-month average and notable volatility in trading patterns. Given that Mexico is a notable oil producer, fluctuations in oil prices can directly impact the peso, with rising prices likely to lend support to the currency.
Forecasts suggest that the EUR/MXN might face challenges in the short term as analysts continue to watch for any shifts in economic data and geopolitical developments. The interplay between the euro's sensitivity to ECB decisions, eurozone growth forecasts, and the peso's trajectory amid US-Mexico trade negotiations will be pivotal in determining the exchange rate's direction moving forward.