Select Language

Mexican Peso holds firm despite Powell ouster talk, USD/MXN below 20.00

Breaking news

Mexican Peso holds firm despite Powell ouster talk, USD/MXN below 20.00

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.04.22 06:13
Mexican Peso holds firm despite Powell ouster talk, USD/MXN below 20.00

update 2025.04.22 06:13

  • Mexican Peso shrugs off modest rebound in USD as market distrust in Fed independence.
  • USD/MXN edges up 0.05% after Peso's 3%  rally last week, fueled by political turmoil in Washington.
  • Sheinbaum says no deal yet with Trump on tariffs, defends Mexico's trade position on steel and aluminum.
  • Key Mexico data ahead: Retail Sales, mid-April inflation, and economic activity will set tone for Peso direction.

The Mexican Peso erased some of its earlier gains, yet it remains poised to continue to gain ground against the US Dollar as investors keep the Greenback bid after US President Donald Trump's comments that he could oust Federal Reserve (Fed) Chair Jerome Powell rattled the markets. The USD/MXN trades at 19.71, up 0.05%.

Last week, the Peso registered close to 3% gains, with the USD/MXN falling from 20.29 to 19.70 as market participants sold the US Dollar due to their lack of confidence in policymakers. The trade war weighed on the Greenback as the US Dollar Index (DXY), which tracks the performance of the American currency against six others, fell 1.06% to 98.35.

Mexico's President Claudia Sheinbaum commented that there is not an agreement with Trump about lifting US tariffs. She said, "We didn't reach an agreement, but we did establish our arguments. In the case of steel and aluminum, we established that we have a deficit. The US exports more steel and aluminum to Mexico than Mexico to the US."

Mexico's economic docket will be busy this week, with traders awaiting the release of Retail Sales, Mid-month inflation, and Economic Activity data.

Mexican products have dodged most tariffs. Nevertheless, US imports of steel, aluminum cars and auto parts remain subject to 25% duties. Last week, Washington decided to apply 21% tariffs on tomatoes.

Daily digest market movers: Mexican Peso stays firm amid absent economic docket

  • Postures between Banco de Mexico (Banxico) and the Fed favor further upside in the USD/MXN. At the May meeting, Banxico is expected to lower interest rates by 50 basis points (bps). On the contrary, the Fed is seen as cautious, as some officials have shown concerns about a reacceleration of inflation spurred by tariffs.
  • Mexico's Mid-month inflation is expected to rise from 3.67% to 3.79% YoY and core figures to increase from 3.56% to 3.77% YoY.
  • Economists project that the Mexican economy will most likely improve in February after contracting -0.2% MoM in January and will expand by 0.6%. Every year, the economy is projected to contract sharply from -0.1% to -0.6%.
  • Banxico Governor Victoria Rodriguez Ceja said the central bank is ready to continue easing policy.
  • Money market players have priced in 96 bps of Fed easing toward the end of 2025 with the first cut expected in July.

USD/MXN technical outlook: Mexican Peso holds firm as USD/MXN stays below 20.00

The USD/MXN turned bearish after it dropped below the 200-day Simple Moving Average (SMA) of 19.89. This exacerbated the drop toward 19.58, a five-month low, before paring some losses. The Relative Strength Index (RSI) has shown that sellers are losing momentum, opening the door for buyers to challenge the 200-day SMA.

A breach of the latter will expose the psychological 20.00 barrier. If cleared, the next stop would be the confluence of the April 14 high and the 50-day SMA near 20.25-20.29 before testing the 100-day SMA at 20.33.

Mexican Peso FAQs

The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country's central bank's policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring - or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries - is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.

The main objective of Mexico's central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.

Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.

As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.


Date

Created

 : 2025.04.22

Update

Last updated

 : 2025.04.22

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

Japan's Top FX Diplomat Mimura: US did not discuss FX levels at finance ministers' meeting

Atsushi Mimura, Japan's Vice Finance Minister for International Affairs and top foreign exchange official, said early Thursday " the US did not discuss FX levels at finance ministers' meeting."
New
update2025.05.22 12:58

EUR/USD hovers near 1.1350, two-week highs ahead of HCOB PMI for Eurozone

EUR/USD is hovering around 1.1340, close to two-week highs during the Asian trading hours. The Euro (EUR) continues its winning streak for the fourth consecutive session ahead of the HCOB Purchasing Managers Index (PMI) for the Eurozone, scheduled to be released later in the day.
New
update2025.05.22 12:47

USD/INR softens ahead of Indian/US PMI releases

The Indian Rupee (INR) gathers strength on Thursday. The strength in Asian peers, a weaker US Dollar (USD) and lower crude oil prices provide some support to the Indian currency. Furthermore, a multi-phase trade deal between the US and India might contribute to the INR's upside.
New
update2025.05.22 12:26

GBP/USD rises to near 1.3450 ahead of UK PMI data

GBP/USD trades higher for the fourth successive day with trading around 1.3430 during the Asian hours on Thursday.
New
update2025.05.22 11:59

Japanese Yen advances to fresh two-week highs against a weaker USD

The Japanese Yen (JPY) regained positive traction following an early Asian session slide in reaction to Japan's upbeat Machinery Orders data, which countered recession fears and boosted hopes for an economic recovery.
New
update2025.05.22 11:40

Trump told EU heads in private Putin isn't ready to end war - WSJ

Citing three people familiar with the conversation, the Wall Street Journal (WSJ) reported late Tuesday that "On a call Monday, President Trump told European leaders that Russian President Vladimir Putin isn't ready to end the war because he thinks he is winning."
New
update2025.05.22 11:27

New Zealand boosts bond program by NZ$4 billion over four years

New Zealand Finance Minister Nicola Willis presents the nation's Budget on Thursday, with the key highlights noted below.
New
update2025.05.22 11:19

WTI slumps to near $61.00, traders await fresh round of nuclear talks between US and Iran

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.10 during the Asian trading hours on Thursday. The WTI price edges lower on the report that a fresh round of nuclear talks between the United States and Iran would take place later this week.
New
update2025.05.22 10:55

BoJ's Noguchi: Japan's economy is growing steadily

Bank of Japan (BoJ) board member Asahi Noguchi said on Thursday that the Japanese economy is growing steadily. Noguchi further stated that the central bank is likely to keep adjusting the policy rate, while carefully assessing whether underlying inflation would be stabilising around 2%.
New
update2025.05.22 10:51

Australian Dollar holds ground following release of S&P PMI data

The Australian Dollar (AUD) gains ground against the US Dollar (USD) on Thursday, extending its gains for the second successive day. The AUD/USD pair maintains its position following the release of the preliminary S&P Global Purchasing Managers Index (PMI) data.
New
update2025.05.22 10:49

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel