Quick overview

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The U.S. dollar weakened in a market increasingly focused on the uncertainty surrounding the American economy, following a sovereign credit rating downgrade by Moody’s and growing concerns over a controversial fiscal plan.

On Friday, the Mexican peso appreciated against the dollar, benefiting slightly from the greenback’s decline and capping off a positive week. The local currency gained ground as investor anxiety about the U.S. economic outlook intensified.

The exchange rate ended the session at 19.2398 pesos per dollar, compared to 19.3121 pesos the previous day, according to official data from the Bank of Mexico (Banxico). This represents a gain of 7.23 centavos for the peso, or 0.37%.

During the day, the dollar traded within a range between a high of 19.3758 and a low of 19.2255 pesos — the latter being the lowest level since early October. Meanwhile, the Dollar Index (DXY), which measures the greenback against six major currencies, dropped 0.83% to 99.10 points.

Dollar Under Pressure

U.S. President Donald Trump added fuel to the fire with renewed trade threats — this time aimed at the European Union. The Republican suggested tariffs of up to 50% on EU goods if ongoing trade negotiations fail.

“It has been very difficult dealing with the European Union, which was formed primarily to take advantage of the United States in TRADE,” Trump posted on his Truth Social platform. “Our talks with them are going nowhere!”

While Trump’s comments initially caused volatility in the markets, the broader impact ultimately centered on the dollar, as investors digested both the trade threats and the growing economic uncertainty in the U.S. This allowed the peso to recover from earlier losses.

Trump’s Plan and Market Outlook

Last week, Moody’s downgraded the U.S. sovereign debt rating — the last of the three major rating agencies to do so — citing unsustainable debt growth as the key factor behind its decision.

Midweek, the House of Representatives approved a tax cut and spending bill backed by President Trump. Analysts have warned that the proposed plan could increase the U.S. public debt by $3 to $5 trillion.

Investors will now turn their attention to the Senate, where the bill faces further debate. Key upcoming events include the release of minutes from the Federal Reserve’s monetary policy meeting on Wednesday, followed by minutes from the Bank of Mexico on Thursday.

Weekly Gains for the Peso

With this recent uptick, the peso not only reached its strongest level since October but also improved its weekly performance. Compared to the previous Friday’s close of 19.4746 pesos per dollar, the peso gained 23.48 centavos, equivalent to a 1.21% increase.