USD/MXN Outlook:
Bearish, as the rate is below its recent average and near recent lows, facing pressure from U.S. economic factors.
Key drivers:
• Rate gap: The Federal Reserve has held interest rates steady, while the Bank of Mexico's recent cuts have made the peso more attractive to investors.
• Risk/commodities: Oil prices have been volatile, influencing the Mexican peso positively, as a stable energy market supports Mexico’s economic outlook.
• One macro factor: Geopolitical tensions and tariff threats from the U.S. have raised uncertainty, impacting the dollar's strength against the peso.
Range:
The USD/MXN is likely to drift, maintaining a position near recent lows within its stable range.
What could change it:
• Upside risk: A surprise rebound in U.S. economic indicators could boost the dollar's appeal.
• Downside risk: Continued tariff tensions and uncertainty surrounding U.S. trade policies could pressure the dollar further.
