Mexican Peso hits five-month high on weak US jobs data

The Mexican Peso capitalizes on a weaker US jobs report and soars versus the US Dollar as risk appetite improves and the US Dollar gets battered on speculation that the Federal Reserve might not raise rates in 2026. The USD/MXN trades at 17.18, after refreshing five-month lows at 17.09.

USD/MXN tumbles as Mexico’s inflation approaches target; Dollar falls on soft NFP

The Mexican economic docket showed that inflation eased to a six-year low, from 3.37% to 3.12% YoY in July, according to INEGI, the National Statistics Agency. Core inflation, which strips volatile items, was 3.95% YoY, exceeding forecasts of 3.94%. The report came a day after the Bank of Mexico – known as Banxico - left rates unchanged at 6.50%, while hinting that the main reference rate would remain steady for the foreseeable future.

Should inflation continue its downward trajectory, it could end 2026 below Banxico’s 3.5% forecast for headline and underlying inflation in 2026. The central bank projects that inflation will converge to its 3% goal in the last quarter of 2027.

Earlier, US Nonfarm Payrolls for July showed a 23K job loss, missing the forecast of 80K gain. May and June revisions cut 103,000 jobs, lower than before. The data support the Fed’s pause on rate hikes, but the Unemployment Rate fell from 4.2% to 4.1%.

The report weakened the Greenback. The US Dollar Index (DXY), which measures the US Dollar's strength against six other currencies, has fallen by 0.42% to 99.54.

Next week, the Mexican economic calendar will feature June Industrial Output. Across the southern border, investors are eyeing the release of inflation on the consumer and producer side, followed by jobless claims data and the University of Michigan (UoM) Consumer Sentiment.

USD/MXN Price Forecast: Technical outlook

In the daily chart, USD/MXN trades at 17.1364, extending its retreat and holding below the clustered simple moving averages (SMA) trio now aligned near 17.4061, which reinforces a bearish near-term bias. The pair has also slipped back under the more recent downward resistance trend line, whose break point at 17.4584 acts as an additional topside cap, while the Relative Strength Index (14) at 32.4 hovers just above oversold territory, hinting that selling pressure is stretched but not yet exhausted.

On the topside, initial resistance is seen at the Triple SMA around 17.4061, followed by the downward sloping trend-line reference at 17.4584, where further rallies would likely stall unless momentum improves decisively. On the downside, the current area around 17.1364 is the immediate battleground, with a deeper slide opening the way toward the earlier structural break zone near 15.6962, while the RSI’s proximity to oversold levels suggests that any move lower could eventually invite a corrective bounce rather than a sustained reversal for now.