Mexican Peso Falls Against the Dollar, Marks Worst Close in Nearly Two Months

Traders are positioning ahead of Banxico’s policy meeting on Thursday, where markets widely expect another rate cut.

Written by: Ignacio Teson • Tuesday, November 4, 2025 • 1 min read

• Last updated: Tuesday, November 4, 2025

Quick overview

The Mexican peso weakened by 0.93% to close at 18.6563 per dollar amid uncertainty over a potential Federal Reserve rate cut in December.
The U.S. Dollar Index gained 0.34%, reflecting pressure on emerging-market currencies due to interest rate differentials.
Traders are anticipating a rate cut from Mexico's central bank (Banxico) in its upcoming meeting on Thursday.
The peso's closing marks its weakest level since September 8, with potential to test the 18.75 exchange rate level.

The peso weakened on Tuesday as markets questioned the likelihood of a Federal Reserve rate cut in December and anticipated that Mexico’s central bank (Banxico) will lower its own benchmark rate this Thursday.

The Mexican peso fell 0.93% to close at 18.6563 per dollar, compared to 18.4847 in the previous session, according to official data from Banxico. During the day, the exchange rate traded between a high of 18.7032, its strongest level since September 8, and a low of 18.4940. Meanwhile, the U.S. Dollar Index (DXY) gained 0.34% to 100.22 points.

USD/MXN

Fed uncertainty weighs on emerging markets

Federal Reserve officials remain divided over the state of the U.S. economy, the risks it faces, and how policy should respond. The debate is expected to intensify ahead of the December meeting, especially amid delays in new data due to the partial U.S. government shutdown.

Uncertainty over the Fed’s next move continues to pressure emerging-market currencies that are highly sensitive to interest rate differentials. According to CME’s FedWatch Tool, futures traders assign a 71% probability that the Fed will cut rates in December.

Markets expect Banxico to follow

Locally, traders are positioning ahead of Banxico’s policy meeting on Thursday, where markets widely expect another rate cut and signals of further easing at the December meeting.

Today’s closing marks the peso’s weakest level since September 8, when it ended at 18.6587 per dollar. Having broken above the 18.50 resistance zone, the exchange rate could now test the 18.75 level.

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ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.