The current market bias for the EUR to MXN exchange rate is bearish. A key driver is the interest rate differential, where the European Central Bank (ECB) maintains a cautious approach towards rate increases, while the Mexican central bank appears more stable. Additionally, geopolitical tensions, particularly due to the war in Ukraine, continue to weigh on the euro's performance. The economic growth outlook for the eurozone is generally positive, but inflation concerns remain a significant factor limiting euro strength.
Expect the EUR to trade within a stable range, reflecting its recent performance, which has fluctuated within 2.6% of its average. An upside risk could arise from improved economic data in the eurozone, while a downside risk may include a divergence in monetary policy between the ECB and Banxico, which could lead to a stronger peso.
Recent oil price volatility might also impact the euro indirectly, as lower oil prices can contribute to weaker inflation in Europe, further pressuring the euro.
