- The Mexican Peso remains under pressure despite trade optimism from US Treasury Secretary Bessent, as markets focus on rising tariff tensions between the US and China.
- A recent Citi survey reveals expectations that Banxico will cut interest rates by 50 basis points in May, alongside lowered growth projections.
- Traders are now turning their attention to the upcoming Mexican CPI and US inflation data, with the Federal Reserve’s meeting minutes set to influence interest rate outlooks.
The Mexican Peso extended its losses for a third consecutive day against the US Dollar, trading at 20.72 with a 0.25% intraday loss. Although comments from US Treasury Secretary Scott Bessent suggested that trade agreements with key partners could be reached, risk appetite remained cautious. Sentiment was further pressured after the White House confirmed that 104% tariffs on Chinese imports went into effect at 12:00 p.m. EST.
Despite a pause in the recent global equity sell-off, investor confidence remained fragile. The Peso edged lower amid a quiet economic calendar, with attention turning to the upcoming release of Mexico’s March Consumer Price Index (CPI), forecast to post a mild increase.
A recent Citi Mexico Expectations Survey indicated that most economists expect Banco de México (Banxico) to cut interest rates by 50 basis points in May. The USD/MXN pair is expected to remain below 21.00, as analysts downgraded Mexico’s 2025 GDP growth projection from 0.6% to 0.3%. Inflation is also anticipated to rise modestly to 3.7% by year-end.
Across the border, Chicago Fed Governor Austan Goolsbee noted that new tariff rates are significantly higher than what the Federal Reserve had previously modeled. While the US data calendar remains light, traders are awaiting the Federal Reserve’s meeting minutes and upcoming CPI and PPI reports, which could influence rate expectations moving forward.
Daily Digest – Market Movers: Mexican Peso pressured by growth concerns and rate outlook
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Citi Mexico Expectations Survey shows Banxico likely to cut rates to 8.0% by end-2025, and to 7.0% in 2026.
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Economists project USD/MXN to end 2025 at 20.90, with inflation rising to 3.7% by year-end from 3.66%.
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Mexico’s GDP forecast for 2025 revised down to 0.3%, from a previous estimate of 0.6%.
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Banxico Governor Victoria Rodríguez Ceja emphasized the central bank’s focus on inflation and sensitivity to evolving US trade policies.
USD/MXN Technical Outlook: Peso struggles as pair breaks above key levels
The USD/MXN pair continues to trend higher after clearing the 50-day and 100-day Simple Moving Averages (SMAs) near the 20.34–20.36 range, keeping bullish momentum intact. A sustained rally could see the pair test the March 4 high at 20.99, followed by the year-to-date (YTD) peak of 21.28.
On the downside, immediate support lies at the psychological 20.00 mark. A break below this level would expose the 200-day SMA at 19.80, which could act as a key support if selling pressure intensifies.
