The Mexican Peso rallies against the US Dollar following the Democratic blue sweep in the US midterm elections, with Democrats set to control the US Senate and the House of Representatives starting in January 2027. Despite this, the lack of an agreement between the US and Iran could derail the emerging market currency and boost the Greenback. The USD/MXN trades at 18.59, down by over 1.29%.
USD/MXN retreats as US election risk fades, while Iran tensions and Banxico’s upcoming rate decision pose fresh risks
The risks of US elections have passed, and the focus is on the Middle East. Recent newswires show that the course of negotiations between Washington and Tehran would be clearer on Friday, according to Al Jadeed, citing Arab diplomatic sources. In the meantime, the US Treasury issued fresh Iran-related sanctions, while US sources speaking with Al Jadeed said that the war enters a delicate phase ahead of the new US Congress taking office, in which the White House could opt for a resumption of attacks on Iran.
US economic data showed that business activity in the services sector, as measured by the ISM Services PMI, was below estimates, expanding at 54.5, down from 54.9 and below forecasts of 54.8. Some of the sub-components of the PMI declined, like the prices paid, but the employment index showed a modest recovery.
Other US data revealed that private companies hired more people than expected, according to the ADP Employment Change report, while the US trade deficit narrowed in September, with goods exports rising to a four-month high.
Ahead, the US docket will feature jobless claims figures on Thursday, followed by Friday’s Nonfarm Payrolls report, which will update the status of the labour market in the US.
In Mexico, the docket was absent, but traders are eyeing the Bank of Mexico (Banxico) monetary policy decision on Thursday. The central bank is expected to hold rates unchanged at 6.50%, according to the latest survey and the futures market. The odds are 60% for a hold, while there’s a 39% chance that Banxico could opt for a rate cut, revealed Prime Terminal.
USD/MXN Price Forecast: Technical outlook
In the daily chart, USD/MXN trades at 18.6012, keeping a clear bullish bias as spot consolidates well above the triple simple moving average cluster, whose latest reading stands near 17.8508. The pair also holds decisively over the former downward resistance trend line, now a distant reference around 14.7081, while the Relative Strength Index (14) at 56.53 has cooled from prior overbought extremes and now suggests steady but less aggressive upside momentum rather than exhaustion.
On the downside, immediate technical support is hinted by the triple simple moving average area at 17.85, which should act as the first cushion on any pullback, ahead of stronger horizontal demand at 16.89. Deeper retracements would likely find additional structural backing around the old trend-line break region near 14.71, though such a move would require a significant reversal from the current bullish configuration.
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