The Mexican Peso (MXN) posted back-to-back bullish days as USD/MXN edges lower by about 0.34% on Monday amid softer-than-expected US data and a mediocre Nonfarm Payrolls report last Friday. The exotic pair trades at 18.08 after peaking near 18.26.
Softer US activity helps the Peso overcome rising yields and Dollar strength
Risk appetite improved on Monday despite rising tensions in the Middle East, as hopes for a quick resolution faded. Wall Street ended the session positively, boosted by tech companies, outweighing rising US Treasury yields and a stronger US Dollar.
The US 10-year T-note yield edged up to 5.349%, but as of writing, it is up 3 basis points to 5.307%. The US Dollar Index (DXY), which measures the Dollar’s performance against six currencies, is up 0.23% at 102.15.
Data in the US showed that business activity slowed moderately as the ISM Services PMI drifted lower from 55.4 to 54.9 in September, below estimates of 55. In the survey, the prices paid subcomponent shows inflationary pressure building, rising from 72.6 in August to 74 and exceeding estimates.
Steve Miller, chair of ISM’s Services Business Survey Committee, said: “Tariffs and fuel cost impacts were the most cited issues impacting respondents’ supply chains.”
Moving forward, traders are eyeing the release of the Federal Open Market Committee (FOMC) meeting minutes on Wednesday, and Fed speeches, ahead of jobless claims the next day.
In Mexico, the economic docket featured Gross Fixed Investment for July, with figures coming at 1.4% MoM as expected, up from the previous 1.3%. The data barely moved the needle as traders eye the release of inflation figures on the consumer and producer sides on Thursday, ahead of the release of the Bank of Mexico's (Banxico) last meeting minutes.
Aside from this, the International Monetary Fund (IMF) said that Mexico needs greater efforts to reduce its debt, although fiscal consolidation continues in 2026. The IMF projects Mexico’s economy to grow 1.5% this year and 1.8% in 2027 but noted that growth is constrained due to external shocks and called for monetary policy to maintain a moderate, tight stance.
Meanwhile, Mexico’s 2027 budget projects public debt rising to 55% of GDP, even though the government continues its fiscal consolidation efforts.
USD/MXN Price Forecast: Technical outlook
In the daily chart, USD/MXN trades at 18.0890, extending its advance well above the clustered simple moving averages (SMA) from the 50-, 100- and 200-day lookbacks, last seen near 17.2465. This alignment keeps the near-term bias firmly bullish, with price decisively above its key trend proxies while the Relative Strength Index (14) at 72.84 shows overbought conditions that hint at stretched upside and rising risk of a corrective pause rather than an immediate reversal.
On the downside, immediate support is offered by the triple SMA cluster around 17.25, reinforced by earlier horizontal demand at 16.89 should a deeper pullback develop. On the topside, while no precise trend-line reading is given, the prevailing downward resistance line drawn from higher levels suggests that any fresh push beyond recent peaks would encounter technical headwinds at subsequent highs, and only a sustained break above that descending cap would open room for a more aggressive bullish extension.
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