Bias: Bearish-to-range-bound, as the EUR/MXN is currently below the 90-day average and sits in the lower half of the 3-month range.
Key drivers:
• Rate gap: The European Central Bank is maintaining a neutral stance while Mexico's central bank holds rates steady, supporting the peso amid uncertainty in the Eurozone.
• Risk/commodities: Oil prices have risen above average recently, which generally benefits commodity-driven currencies like the Mexican peso but adds pressure to the euro amid economic slowdowns.
• One macro factor: Mexico's implementation of tariffs on imports from China may lead to increased costs, impacting trade and currency performance.
Range: The EUR/MXN is expected to remain mostly stable, with potential for slight movement as it tests the lower end of its recent range.
What could change it:
• Upside risk: A surprising boost in Eurozone economic data could rally the euro against the peso.
• Downside risk: Continued underperformance in European economic indicators may further drag the euro lower.
