USD/MXN Outlook: The USD/MXN rate is likely to decrease as it currently sits below its 90-day average and near recent lows, pressured by multiple uncertainties surrounding the US economy.
Key drivers:
- Rate gap: The Federal Reserve is expected to cut rates in 2026, while the Bank of Mexico has paused its rate cuts, creating weaker support for the USD compared to the MXN.
- Risk/commodities: Recent volatility in oil prices continues to impact the Mexican Peso, as it remains closely linked to Mexico's export revenues.
- One macro factor: Geopolitical tensions stemming from US airstrikes in Venezuela have raised concerns about stability, adding pressure on the USD.
Range: The USD/MXN rate is likely to drift within the recent range, affected by ongoing volatility in both economies.
What could change it:
- Upside risk: A hawkish surprise from the Federal Reserve may strengthen the USD.
- Downside risk: Continued deterioration in the US labor market could weaken the USD further.