Bias: bearish-to-range-bound, current level sits below the 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: The Fed is expected to cut rates toward a neutral stance in 2026, while Banxico holds at a high level, keeping the differential tilted toward the dollar and supporting MXN.
- Macro factor: Mexico’s tariff policy on imports from non-FTA countries could raise input costs and weigh on the peso if inflation or trade frictions intensify.
Range: The pair is likely to drift within the established 3-month range, staying toward the lower portion, with occasional tests of the low end if US data surprises.
What could change it:
Upside risk: A stronger US jobs report or a hawkish Fed that keeps US rates higher for longer, lifting the dollar.
Downside risk: Softer US data or faster-than-expected Fed easing that strengthens MXN.
