Mexican Peso Strengthens Against the Dollar, Closes Week with Gains
Given the current downward momentum and underlying fundamentals, the likelihood of further declines in the pair appears elevated.
Quick overview
- The Mexican peso appreciated against the U.S. dollar, closing at 19.4669 pesos per dollar, marking a week of gains.
- Improved market sentiment surrounding global trade and upcoming U.S.-China negotiations contributed to the peso's strength.
- For the week, the peso gained 0.67%, despite a local inflation uptick that did not alter expectations for monetary policy.
- Future performance of the peso will likely depend on the outcomes of the U.S.-China trade talks.
The Mexican peso appreciated against the U.S. dollar on Friday, extending a week of gains.
The local currency advanced on improved market sentiment surrounding global trade, as investors await high-level talks between U.S. and Chinese trade negotiators scheduled for the weekend in Switzerland.
The exchange rate closed the session at 19.4669 pesos per dollar, according to data from the Bank of Mexico (Banxico). Compared to Thursday’s official close of 19.5373, the peso gained 7.04 centavos, or 0.36%.
Throughout the session, the dollar traded in a range between 19.5476 and 19.4706 pesos. Meanwhile, the U.S. Dollar Index (DXY)—which measures the greenback’s performance against a basket of six major currencies—fell 0.29% to 100.35 points.
Trade Optimism Drives Sentiment
U.S. President Donald Trump said tariffs of 80% on Chinese goods “seem about right”, marking his first specific suggestion as an alternative to the current 145% tariffs in place on Chinese imports.
Further fueling optimism, India reportedly offered to narrow its tariff gap with the U.S. to below 4% from the current 13%, in exchange for exemptions from current and potential U.S. tariffs, according to Reuters.
In addition, Trump and British Prime Minister Keir Starmer announced a “major trade deal” on Thursday—the first since the U.S. introduced sweeping import tariffs, which were later suspended.
Weekly Performance
For the week, the peso posted a modest gain, digesting a local inflation uptick that wasn’t significant enough to shift expectations for Banxico’s upcoming monetary policy decision. Markets still anticipate another cut to the key interest rate.
From last Friday’s close of 19.5985, the peso appreciated 13.16 centavos, equivalent to 0.67%. Future performance will likely depend on the outcome of the U.S.-China negotiations.
The USD/MXN pair is testing support at 19.47, with resistance near 19.76. Given the current downward momentum and underlying fundamentals, the likelihood of further declines in the pair appears elevated.
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