USD/MXN slides lower to around 17.56 as increased risk appetite strengthens the Mexican Peso

Mexican Peso Strengthens Amid Improved Market Sentiment

On Wednesday, the Mexican Peso regained some value as investor confidence improved, despite ongoing tensions in the Middle East that have persisted for five days. Positive US economic indicators were largely overlooked by those favoring the Peso, as reflected in the USD/MXN exchange rate dropping to 17.56, a decrease of 0.74%.

Peso Advances Despite Robust US Figures; Focus Shifts to Upcoming Inflation and Jobs Data

Market optimism increased after February’s ISM Non-Manufacturing PMI showed notable growth, particularly in New Orders, which reached their highest point since September 2024. The New Orders index surged from 53.1 to 58.6, while the overall Services index climbed from 53.8 to 56.1, surpassing expectations of 53.5.

Earlier in the day, the ADP National Employment Change report indicated that private sector employment grew by 63,000 in February, up from January’s revised 11,000 and exceeding forecasts of 50,000.

In Mexico, there were no major economic releases, but investors are anticipating the Gross Fixed Investment data on March 5 and the final Consumer Price Index (CPI) figures for February on March 9.

On Tuesday, the Bank of Mexico (Banxico) published its private analyst survey, revealing that most economists predict inflation will end higher both this year and next.

Projections suggest headline inflation will reach 4% in 2026, with core CPI expected to rise to 4.17%, up from 4.11% in the previous survey. Economic growth is forecasted to increase from 1.5% to 1.8% in 2026 and remain steady the following year.

The USD/MXN rate is anticipated to close at 18.10, down from the previous estimate of 18.50, while Banxico is expected to lower interest rates by 50 basis points to 6.50%.

Banxico Deputy Governor Galia Borja commented that the central bank has flexibility to cut interest rates, citing reduced consumer spending, falling investment, and the Peso’s appreciation as factors likely to help control inflation.

Looking ahead, the USD/MXN is projected to stabilize around the 17.50 level, with traders awaiting key US employment reports later in the week.

USD/MXN Outlook: Downward Trend Persists Unless Bulls Surpass 18.00

Technically, the USD/MXN remains in a downward trend, though bearish momentum appears to be fading as the pair holds above its 20- and 50-day Simple Moving Averages (SMAs) at 17.25 and 17.50, respectively.

The Relative Strength Index (RSI) has turned positive after staying below the neutral 50 mark since late November 2025, indicating that selling pressure is weakening.

Additionally, a resistance trendline originating from the April 2025 highs near 21.07 was breached on March 3, suggesting that buyers are gaining traction.

For a sustained upward move, the pair needs to break above the 100-day SMA at 17.91. If successful, the next targets would be 18.00 and then the 200-day SMA. On the downside, support is found at the 50- and 20-day SMAs, with 17.00 as a key level to watch.