Outlook
The peso faces a range-bound path near term, with direction tied to Banxico policy signals, inflation progress, and global risk sentiment. MXN is currently trading around 3-4% above its 3-month averages across major pairs, reflecting some near-term strength but no clear breakout.
If risk appetite remains positive and USMCA discussions progress constructively, the peso could drift modestly higher versus the dollar. Conversely, a firmer U.S. dollar or stronger inflation surprises that keep Banxico cautious could see the MXN soften again.
Key drivers
- Banxico held the policy rate at 7% on February 6, signaling a cautious stance to inflation and weighing modestly on the peso.
- Inflation outlook: Banxico extended its timeline for inflation to return to 3% until Q2 2027, reflecting persistent core inflation and external challenges.
- Emerging-market support: Improved risk sentiment and a weaker U.S. dollar on February 12 supported EM currencies, aiding the peso in the near term.
- Trade relations: Ongoing USMCA negotiations and related trade discussions influence Mexico’s growth outlook and FX sensitivity.
Range
MXN/USD: 0.058368 (3-month avg 0.056319; range 0.054040–0.058427)
MXN/EUR: 0.049511 (3-month avg 0.047991; range 0.046900–0.049569)
MXN/GBP: 0.043312 (3-month avg 0.041828; range 0.040994–0.043312)
MXN/JPY: 9.0473 (3-month avg 8.7869; range 8.4632–9.1351)
What could change it
- Surprise shift in Banxico policy or a notable change in inflation trajectory.
- Shifts in U.S. policy or data that alter dollar strength or risk sentiment.
- Progress or setbacks in USMCA talks and other trade-related developments.
- Global risk-on/risk-off shifts or commodity price changes affecting Mexico’s export outlook.
