The USD to MXN exchange rate has shown stability recently, with the USD trading at 18.32, which is approximately 1.0% below its three-month average of 18.5. The range of the exchange rate has been relatively narrow, fluctuating between 18.29 to 18.82 over the past few months.
Recent trends indicate a softening of the USD as risk appetite improves, driven by political developments such as the signing of a funding bill by US President Donald Trump, which has reduced fears associated with government shutdowns. Analysts suggest that as risk sentiment strengthens, the demand for the safe-haven USD diminishes.
Key factors influencing the USD include the ongoing transition in Federal Reserve leadership, with expectations for a new chair to thoroughly assess the Fed's structure and monetary policy approach. Additionally, inflation data expected in the upcoming days may have significant ramifications for Federal Reserve interest rate decisions. Concerns over US-China trade relations are also noteworthy, particularly with an impending tariff negotiation deadline which could further affect the USD's valuation.
For the Mexican Peso, there are several supportive elements at play. The cautious stance of the Federal Reserve, maintaining steady interest rates with potential cuts in late 2025, has contributed to a weaker USD, benefiting the MXN. The delay in tariff implementations previously imposed on Mexican imports has allowed the MXN to recover from earlier losses. Furthermore, the nearshoring trend has been bolstering Mexico's manufacturing sector, leading to substantial foreign direct investment, which is positively impacting demand for the Mexican peso. Stabilizing oil prices around $83–85 per barrel have also reinforced Mexico's fiscal health, providing additional support for the peso.
Overall, the current dynamics suggest that while the USD may face pressure due to domestic and international economic factors, the MXN is benefiting from robust domestic developments and support from trade adjustments. Currency experts are keeping a close watch on the forthcoming economic data releases and geopolitical negotiations, which could lead to shifts in the exchange rate in the near term.
