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The Mexican peso gained ground against the U.S. dollar on Monday, approaching the psychological barrier of 19 pesos per dollar, as markets closely monitored renewed trade talks between the United States and China.

The exchange rate closed the session at 19.0424 pesos per dollar, compared to 19.1054 pesos last Friday, according to official data from the Bank of Mexico (Banxico). The move represented a gain of 6.3 centavos, or 0.33%, for the Mexican currency.

During the day, the dollar traded within a range of 19.1082 (high) and 19.0272 (low) pesos. Meanwhile, the U.S. Dollar Index (DXY)—which measures the greenback against a basket of six major currencies—fell 0.17% to 99.02 points.

Risk Appetite Rises on U.S.-China Trade Talks

Investor sentiment improved as senior officials from Washington and Beijing met in London to continue negotiations over ongoing trade disputes, including issues related to rare earth minerals and technology, following mutual accusations of agreement violations. These talks build on the preliminary deal reached in May that helped ease tensions between the two powers.

The resumption of negotiations has increased appetite for risk among investors, contributing to the peso’s gains.

Inflation in Focus

Locally, the peso also found support after Mexico’s inflation data for May came in higher than expected, surpassing the central bank’s 3% target range (±1 percentage point). Inflation reached 4.42%, its highest level since November.

Analysts suggest that the 19 peso mark will serve as a key technical support level in the short term. If broken, the exchange rate could move toward the 18.80 zone. This week, markets will also be watching closely for U.S. consumer and producer price data, which could influence Fed policy expectations.

Mexican Stock Market Slips Despite Trade Optimism

Mexico’s stock exchanges closed lower on Monday, snapping a two-session winning streak. The pullback came despite optimism around renewed U.S.-China trade talks and followed the release of local inflation data that exceeded Banxico’s target.

The S&P/BMV IPC, Mexico’s benchmark stock index tracking the most traded shares on the Mexican Stock Exchange (BMV), fell 0.43% to 57,813.38 points. The FTSE BIVA, operated by the Institutional Stock Exchange (BIVA), dropped 0.49% to 1,165.98 points.

Although the trade news was seen as a positive development globally, domestic concerns around inflation and its potential impact on monetary policy weighed on Mexican equities.