The Mexican Peso depreciated by about 0.91% against the US Dollar on Thursday amid positive US data, while Banxico’s last meeting minutes indicated inflation edging higher, a trend confirmed by the September print. The USD/MXN trades at 18.14 after reaching a low of 17.95.
US equities weighed on the Mexican Peso
The emerging-market currency is weighed down by a sudden shift in market mood, as the Financial Times (FT) reports that OpenAI's annual revenue is $20 billion lower than previously signalled. The news weighed on tech stocks and sent US equities tumbling amid traders' fears that the rally may be questionable.
Before that news, global equities were underpinned by US President Trump's post on Truth Social, saying that they held productive discussions with Iran and that there wouldn’t be attacks on Iran, before the midterm elections.
In the FX markets, the Greenback underperforms against most G7 currencies, but not against the Peso. The US Dollar Index (DXY), which measures the buck’s value against six currencies, is down 0.07% at 102.17.
Would Banxico raise rates as headline inflation approaches 3.50%?
Headline inflation in Mexico rose from 3.26% to 3.45% YoY in September, below estimates of 3.47%. Core figures for the same period decreased from 3.88% to 3.75%, below forecasts of 3.8%.
The doubt lingers over whether the Bank of Mexico (Banxico) could make a U-turn and raise rates if inflation surpasses the 4% threshold in the future. Nonetheless, the minutes revealed that policymakers “projected inflation path over the forecast horizon remains skewed to the upside.”
Fed’s Musalem remains hawkish; US jobs market solid
In the US, St. Louis Fed President Alberto Musalem was hawkish, saying that inflation remains above 2% and that further tightening is needed. He added that contacts are about inflation rather than jobs.
The latest Fed minutes revealed that all members backed September’s rate hike and that the board sees the labour market as “stable and generally viewed … as close to maximum employment.”
Data from the US showed that Initial Jobless Claims dipped below estimates, indicating labour market strength.
Ahead, USD/MXN traders will eye the release of the University of Michigan Consumer Sentiment print, as the Mexican economic schedule is absent.
USD/MXN Price Forecast: Technical outlook
USD/MXN daily chart
In the daily chart, USD/MXN trades at 18.1986, extending its recovery above the clustered simple moving averages (SMA) around 17.2852 and maintaining a clear bullish near-term bias. Price action is now well supported by that SMA floor and the prior horizontal base at 16.8866, while the Relative Strength Index (14) at 72.18 shows the pair in overbought territory, hinting that upside momentum is stretched but not yet reversing.
On the downside, initial support is seen at the triple SMA area near 17.29, ahead of the horizontal support level at 16.89 which marks the latest significant reaction low. As long as USD/MXN holds above these supports, dips are likely to attract buying interest, with a period of consolidation or a modest pullback favored to cool the overbought daily RSI before the broader uptrend can sustainably extend.
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