- The Mexican Peso holds steady, maintaining recent gains ahead of April's Consumer Confidence data—a crucial indicator of domestic sentiment that could impact Banxico's next policy move.
- Optimism surrounding the upcoming US-China trade talks on Saturday continues to boost sentiment, indirectly supporting the Peso and other emerging market currencies.
- Meanwhile, USD/MXN remains susceptible to signals from the Federal Reserve ahead of Banxico’s upcoming rate decision, as policy divergence is expected to shape the pair's near-term direction.
The Mexican Peso (MXN) is trading relatively flat against the US Dollar (USD) during Friday’s European session, as market focus shifts to the upcoming Mexican Consumer Confidence data and a series of Federal Reserve (Fed) speeches, while traders brace for the US-China trade discussions scheduled for Saturday.
At the time of writing, USD/MXN is trading around 19.51, down 0.03%. Market sentiment remains cautious, with potential movements driven by shifts in Fed policy signals, domestic economic indicators, and global trade developments.
Mexican Peso awaits Consumer Confidence data
At 12:00 GMT, Mexico’s National Institute of Statistics and Geography (INEGI) will release April’s Consumer Confidence figures, with the previous reading at 46. This index measures households' perceptions of the economy, job prospects, and future financial conditions. A stronger reading could indicate increased optimism and higher domestic spending, supporting the Peso, while a weaker print may reflect economic concerns, weighing on the currency.
Fed speakers add to the Peso's vulnerability
The interest rate differential and policy divergence between Banxico and the Federal Reserve remain key factors for the USD/MXN pair. Following the Fed’s decision to keep interest rates unchanged on Wednesday, markets are now closely monitoring a series of speeches from Fed officials on Friday.
Key voting members, including Governors Adriana Kugler, Lisa Cook, and Christopher Waller, are set to speak, with markets particularly attuned to any hawkish signals amid ongoing uncertainty about the Fed’s next steps. Known hawks like Kugler and Musalem are likely to influence sentiment toward a stronger USD if they reiterate the case for maintaining higher rates for an extended period.
Moreover, multiple addresses at the Hoover Monetary Policy Conference could hint at a coordinated stance on inflation and interest rate strategies, potentially impacting the Peso if the tone leans hawkish.
Mexican Peso Daily Digest: Key USD/MXN Fundamental Drivers
- Over the weekend, Treasury Secretary Scott Bessent and Jamieson Greer are set to meet with Chinese officials in Switzerland. Market sentiment improved following President Trump’s statement on Thursday that he “could lower tariffs on China if talks go well,” made after the announcement of the US-UK trade deal. This optimism has supported the Mexican Peso and other emerging market currencies by boosting risk appetite.
- As an Emerging Market (EM) currency, the Peso is highly sensitive to changes in risk sentiment and is heavily reliant on exports to the United States, which make up approximately 80% of Mexico’s total exports. However, recent US tariff measures on aluminum, steel, and autos, along with the potential for additional levies outside the USMCA framework, have raised concerns about Mexico’s economic outlook and heightened uncertainty.
- The Bank of Mexico (Banxico) is anticipated to reduce interest rates by 25 to 50 basis points (bps) at its upcoming meeting on May 15.
- Thursday’s release of Mexico’s April inflation report showed an increase in price growth to 3.93% year-on-year (YoY), surpassing the forecast of 3.90%. Core inflation also rose by 0.49% month-on-month (MoM), compared to 0.43% in March, and exceeded expectations of 0.47%.
- The unexpected rise in both headline and core inflation signals persistent underlying price pressures. Nevertheless, since inflation remains within Banxico’s target range of 2% to 4%, markets still widely expect a rate cut next week.
USD/MXN Technical Outlook: Bearish Bias Below 19.600
The USD/MXN pair continues to face selling pressure, trading just above a crucial support level at 19.50. The overall trend remains downward, with the pair struggling to regain the 10-day Simple Moving Average (SMA) at 19.59, which acts as dynamic resistance.
A descending trendline from the April decline further reinforces the bearish momentum. For the bullish case to gain momentum, USD/MXN would need to break above the 10-day SMA and surpass the psychological resistance at 19.60. Such a move could open the path toward the May high near 19.78.
If the pair falls below the key support at 19.50 and records a daily close beneath the April low of 19.47, it could signal further downside potential.
The Relative Strength Index (RSI) stands at 38.35, indicating persistent bearish momentum without being oversold, leaving room for continued selling unless a significant fundamental catalyst shifts sentiment.
With ongoing trade talks, inflation data, and central bank decisions, USD/MXN remains vulnerable to shifts in risk sentiment and policy divergence between the Federal Reserve and Banxico. A break of key technical levels could determine the pair’s short-term direction.
USD/MXN daily chart
