Quick overview

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The Mexican peso strengthened modestly against the U.S. dollar on Tuesday, supported by a lack of new developments in the Iran conflict, as markets positioned ahead of the Federal Reserve’s monetary policy decision.

The exchange rate closed at 17.6645 pesos per dollar, according to official data from Mexico’s central bank (Banxico). Compared to the previous LSEG reference of 17.6736 (in the absence of an official fixing due to a holiday), the currency posted a marginal gain of 0.05%, less than one cent.

The dollar traded within a range of 17.7394 at the high and 17.6116 at the low. Meanwhile, the U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, fell 0.25% to 99.56.

Lower risk aversion supports EM currencies

The absence of further geopolitical escalation allowed investors to rotate into higher-beta assets, putting mild pressure on the U.S. dollar’s safe-haven appeal.

Market participants are now focused on the Federal Reserve’s policy announcement due Wednesday. While rates are widely expected to remain unchanged, attention will center on Chair Jerome Powell’s press conference and any references to geopolitical risks.

If the Fed maintains a hawkish tone, the peso could test the 17.73 resistance level seen earlier in the session. However, if de-escalation in the Middle East persists, the currency may attempt to consolidate within the 17.60–17.65 range.