USD/MXN Outlook: Likely to decrease, as the rate is currently below its recent average and nearing recent lows while facing headwinds from U.S. tariff concerns.
Key drivers:
• Rate gap: The Federal Reserve is likely to cut rates in 2026, which could weaken the US dollar against the Mexican peso.
• Risk/commodities: Ongoing trade tensions and uncertainty around tariffs are undermining investor confidence in the US dollar, affecting its demand.
• One macro factor: Mexico's economy is expected to grow moderately, which might prevent a significant depreciation of the peso despite external pressures.
Range: The USD/MXN is likely to drift within its recent range as factors affecting both currencies remain balanced, avoiding extreme movements.
What could change it:
• Upside risk: An unexpected improvement in U.S. labor market data could bolster the dollar.
• Downside risk: Continued geopolitical tensions affecting U.S. economic stability could further weaken the dollar against the peso.
