Fundamental analysis
The Mexican peso appreciated toward 19.85 per USD in March, marking a yearly high, driven by Mexico’s strong external position, including a trade surplus and steady remittance inflows.
High interest rates continue to support the currency by attracting carry trade flows and foreign investment. Additionally, expectations of a Federal Reserve rate cut have weakened the US dollar, further benefiting the peso.
However, challenges remain, such as a 25% US tariff on Mexican steel and aluminum imports and weak domestic indicators, including GDP contraction and declining consumer confidence. Optimism over potential trade agreements, especially with Canada, has helped ease some concerns, but a possible Banxico rate cut at the end of March could reduce the peso’s yield advantage, posing a downside risk to its recent strength.
Technical analysis
The price broke below the psychological support level around 20.00, reinforcing the idea of a possible trend reversal. The bearish crossover of the EMAs (21 and 78) confirms the price's direction to the downside, with lower lows and lower highs. If the price continues to fall, the next support level could be around 19.75 before reaching 19.50. Conversely, if the price manages to recover and break above the 20.00 resistance, it could test the resistance level around 20.20.
Author: María Agustina Patti
Financial Markets Strategist - Exness
The Mexican peso appreciated toward 19.85 per USD in March, marking a yearly high, driven by Mexico’s strong external position, including a trade surplus and steady remittance inflows.
High interest rates continue to support the currency by attracting carry trade flows and foreign investment. Additionally, expectations of a Federal Reserve rate cut have weakened the US dollar, further benefiting the peso.
However, challenges remain, such as a 25% US tariff on Mexican steel and aluminum imports and weak domestic indicators, including GDP contraction and declining consumer confidence. Optimism over potential trade agreements, especially with Canada, has helped ease some concerns, but a possible Banxico rate cut at the end of March could reduce the peso’s yield advantage, posing a downside risk to its recent strength.
Technical analysis
The price broke below the psychological support level around 20.00, reinforcing the idea of a possible trend reversal. The bearish crossover of the EMAs (21 and 78) confirms the price's direction to the downside, with lower lows and lower highs. If the price continues to fall, the next support level could be around 19.75 before reaching 19.50. Conversely, if the price manages to recover and break above the 20.00 resistance, it could test the resistance level around 20.20.
Author: María Agustina Patti
Financial Markets Strategist - Exness
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.