EUR/MXN Outlook:
The outlook for EUR/MXN is slightly positive but likely to move sideways, as the rate is currently above its recent average but lacks a clear driver for continued strength. The rate has recently reached 14-day highs, indicating some upward movement.
Key drivers:
• Rate gap: The European Central Bank has kept interest rates steady, while the Bank of Mexico's rates remain higher, which typically supports MXN.
• Risk/commodities: Recent oil price increases may benefit the MXN since a stronger peso can reduce import costs for energy.
• One macro factor: Eurozone inflation is expected to stabilize, with minor fluctuations likely due to upcoming German CPI reports, which may limit euro gains.
Range:
The EUR/MXN is likely to drift within its recent range, testing both upper and lower extremes without decisive movements.
What could change it:
• Upside risk: A stronger-than-expected economic report from the Eurozone could boost EUR value.
• Downside risk: Heightened global market volatility could lead to a shift away from the euro, negatively impacting its value.
