The USD to MXN exchange rate has been experiencing significant fluctuations influenced by both U.S. and Mexican economic indicators. Recently, the U.S. dollar weakened, moving to 17.91 against the peso, reflecting a decline of 2.2% from its three-month average of 18.32. Analysts attribute this downward trend primarily to expectations of aggressive rate cuts by the Federal Reserve, with markets pricing in reductions starting around March to June 2026. A recent softening of inflation in the U.S., as indicated by a dip in the consumer price index from 3% to 2.7%, has intensified bets for a dovish Federal Reserve stance, adding further downward pressure on the USD.
In contrast, the Mexican peso has strengthened significantly, recently reaching 17.97 per USD, its strongest position since July 2024. This appreciation is supported by the Bank of Mexico’s proactive rate cuts aimed at boosting economic growth and favorable external factors such as trade exemptions from the U.S. Additionally, the trend of nearshoring, with U.S. companies relocating production to Mexico, has bolstered exports, reflecting a robust demand for MXN.
While the U.S. dollar faces obstacles from mixed economic data and a cooling labor market, the Mexican peso benefits from a combination of high benchmark interest rates and improving trade conditions. Recent market movements indicate a stable range for the USD to MXN exchange rate, confined within 4.5% from the highs of 18.69 to lows of 17.89. Industry experts suggest that the medium-term outlook for the dollar remains bearish due to ongoing fiscal concerns and the expectation of Fed easing, while the peso’s outlook appears more favorable with supportive domestic policies and external trade dynamics.
As the market evolves, upcoming economic reports and Federal Reserve communications will be crucial for forecasting potential shifts in the USD to MXN exchange rate.
