The Mexican Peso (MXN) continued its winning streak against the US Dollar (USD) for the fourth consecutive trading session, despite Mexican financial markets being closed for a national holiday. The USD/MXN pair traded near 19.90, showing little change as US economic data took center stage.
Market Developments and Economic Outlook
Wall Street posted modest gains on Monday, with optimism in financial markets overshadowing mixed US data. While February’s Retail Sales report showed slight improvement, the New York Fed’s Empire State Manufacturing Index plunged from 5.7 to -20, reflecting weakening business conditions.
Meanwhile, concerns over trade tensions between Mexico and the United States remain in focus. The Organization for Economic Cooperation and Development (OECD) warned that former US President Donald Trump’s proposed 25% tariffs on Mexican goods could push Mexico into a recession while slowing US economic growth. The OECD now projects Mexico’s economy will contract by -1.3% in 2025 and -0.6% in 2026, while the US economy is expected to expand by 2.2% and 1.6%, respectively.
Despite these concerns, traders are looking ahead to Mexico’s Aggregate Demand and Private Spending reports, set for release on March 19 and 20. Additionally, the Bank of Mexico (Banxico) is expected to continue easing monetary policy at its upcoming March 27 meeting, in response to a sluggish economy and ongoing disinflation.
USD/MXN Technical Outlook
The USD/MXN pair remains below the psychological 20.00 level, reinforcing a bearish outlook for the US Dollar. Sellers will aim to push the pair lower, with the next key support levels at the 200-day Simple Moving Average (SMA) of 19.65, followed by 19.50, 19.00, and the August 2024 low of 18.64.
Conversely, a break above 20.00 could pave the way for further upside, with resistance at the 100-day SMA of 20.35. Trade negotiations between the US and Mexico remain a key factor in determining the Peso’s trajectory, as a favorable agreement could strengthen the currency and ease economic uncertainty.
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