Outlook
The MXN remains sensitive to global risk sentiment and Banxico’s inflation trajectory. After Banxico held the policy rate at 7% on February 6 and pushed the inflation target return to 3% further out to the second quarter of 2027, the peso faced initial pressure but benefited from stronger EM sentiment on February 12. If this risk-on backdrop persists, MXN/USD could drift toward the 0.056–0.057 area (more MXN per USD broadly weakening). In a risk-off scenario or if Banxico signals a tougher inflation path, the pair could move toward 0.059–0.060. Ongoing USMCA discussions and trade developments remain a backdrop, with the path for the peso still data- and policy-dependent.
Key drivers
- Banxico policy decision and inflation outlook: holding at 7% with a cautious inflation stance; inflation expected to return to 3% by 2Q2027 due to persistent core inflation and external factors.
- Emerging-market risk appetite and USD direction: weaker USD and stronger appetite for EM currencies supported the peso in mid-February; further positive sentiment could sustain MXN strength.
- Trade relations and USMCA developments: ongoing negotiations influence near-term sentiment and peso performance.
- Domestic and external data flow: inflation prints, growth signals, and global market risk mood will keep the MXN sensitive to surprises.
Range
MXN/USD: 0.054040–0.058473, currently near 0.058473 (3-month average 0.056412; 3-month range about 8.2%)
MXN/EUR: 0.046900–0.049569, currently near 0.049421 (3-month average 0.048043; 3-month range about 5.7%)
MXN/GBP: 0.040994–0.043312, currently near 0.043215 (3-month average 0.041868; 3-month range about 5.7%)
MXN/JPY: 8.4753–9.1351, currently near 9.0231 (3-month average 8.7988; 3-month range about 7.8%)
What could change it
- Monetary policy shifts: any Banxico move on rates or changes to the inflation path could redraw the bias.
- Global risk sentiment: a shift to risk-off or risk-on changing USD strength will move MXN pairs accordingly.
- Trade and USMCA developments: progress or setbacks in negotiations could alter peso risk premiums.
- Domestic data surprises: stronger or weaker inflation and growth data than expected could reprice near-term trajectory.
