Mexican Peso hits fresh YTD high against the Greenback

• The Mexican Peso strengthens as Trump's "Big Beautiful" tax bill comes into focus. 
• Developments in the United States and the performance of the US Dollar continue to be significant factors influencing the USD/MXN exchange rate. 
• The USD/MXN has dropped to its lowest point in seven months, driven by a resurgence of weakness in the US Dollar.

The Mexican Peso (MXN) is strengthening against the US Dollar (USD) and hits a fresh year-to-date high on Tuesday as markets turn cautious ahead of Wednesday's House vote on President Trump's "One Big Beautiful Bill." 

The legislative uncertainty surrounding the proposed tax package weighs on the USD, with investors assessing its potential implications for US fiscal policy and debt levels.

Fresh developments have intensified pressure on the Greenback, allowing the Mexican Peso to seize momentum in the European session. 

As the market responds, USD/MXN has slipped by 0.15%, trading below the pivotal level of 19.30 at the time of writing.

Mexican Peso daily digest: USD/MXN remains at the mercy of the Greenback

• As the US Dollar drives broader market direction, shifts in USD sentiment, driven by US fiscal policy, economic data, or Fed signals, tend to dictate the short-term trajectory of USD/MXN, with the Peso reacting accordingly.
• The House will vote on President Trump's "One Big Beautiful Bill," which aims to extend the 2017 Tax Cuts and Jobs Act and introduce new tax relief measures. 
• While the bill could boost short-term growth, it is projected to increase the federal deficit significantly over the next decade, raising concerns about long-term US debt sustainability and putting pressure on the US Dollar.
• Throughout the day, Fed officials Thomas Barkin, Alberto Musalem, Adriana Kugler, Raphael Bostic, Mary Daly, and Beth Hammack are scheduled to speak, with markets closely watching their remarks for clues on the Fed's policy outlook amid fiscal and economic uncertainty.
• On Friday, Moody's became the latest credit agency to downgrade the US sovereign rating.
• As perceived credit risk rises, the US must offer higher interest rates to attract investors who might otherwise shift capital to alternative safe-haven assets. 
• On Wednesday, Mexico will release its March retail sales data, while on Thursday, the country will release the first half-month inflation for May and the Gross Domestic Product (GDP) data for the first quarter. 
• On the US side, S&P Global will release the preliminary Purchasing Managers Index (PMIs) for May and Existing Home Sales data for April on Thursday for fresh economic signals.
• In short, the USD/MXN pair is sensitive to data that reshapes expectations for growth, inflation, and central bank direction in either country.

Mexican Peso technical analysis: Peso holds gains as USD/MXN consolidates between key levels

The USD/MXN has dropped to its lowest level since October, breaking through the previous psychological support level, which has now turned into resistance at 19.30. 

Currently, prices are below the descending trendline established during the decline in April. 

The Relative Strength Index (RSI) indicator at 36.19 shows an increase in bearish momentum. Since the 30 mark is considered a potential oversold territory, the bearish trend remains intact, with the next key support level at the round number of 19.20. 

USD/MXN daily chart

If prices fall below 19.20, it could open the door to the October low of around 19.11, paving the way towards the 19.00 mark. 

On the other hand, if USD strength resurges and prices rise above the descending trendline, USD/XN could see a retest of the April low near 19.47, bringing the 20-day Simple Moving Average (SMA) into play at 19.53.