Colombian Peso Holds Firm as Fiscal Clouds Gather: Technicals Confirm Bearish USD/COP Trend

The Colombian peso closed Tuesday, June 24, 2025, at 4,080.06 per US dollar, holding its ground after a month of steady appreciation. Official data confirms the peso’s resilience, with the TRM unchanged on the day but down 2.05% from a month earlier.

The USD/COP rate hovered near its lowest levels of the year, reflecting a market more confident in Colombia’s currency than in recent months. Macroeconomic fundamentals shaped the day’s trading.

Colombia’s economy grew 2.7% in the first quarter, with private consumption driving the expansion. Inflation slowed to 0.4% in May, aided by a stronger peso and easing food prices, though annual inflation remains above target at 5.12%.

The central bank’s recent rate cut to 9.25% continues to support domestic demand, but the fiscal deficit’s expansion to 7.1% of GDP casts a shadow over the currency’s longer-term prospects.

Oil revenues have softened, and the government’s decision to suspend the fiscal rule signals persistent budgetary stress. Remittance inflows remain a critical support, with record levels helping to offset weaker commodity earnings.

These flows, now at historic highs, underpin the peso’s stability and provide a buffer against external shocks. Technical analysis of the daily and four-hour charts confirms the market’s bearish stance on USD/COP.

Colombian Peso Faces Continued Downward Pressure

The pair trades well below its 50- and 200-day simple moving averages, which sit at 4,173 and 4,229, respectively. The price remains under the Ichimoku cloud and major resistance lines, signaling continued downward momentum.

Bollinger Bands show the pair hugging the lower band, reflecting persistent selling pressure. The MACD indicator remains negative, with the signal line below zero and histogram bars deep in red, confirming bearish momentum.

The Relative Strength Index (RSI) on both timeframes hovers in the low 40s, indicating neither extreme oversold nor overbought conditions but suggesting further downside risk.

Volumes have not spiked, indicating the move stems from steady selling rather than panic or a sudden shift in positioning. ETF flows and large-scale institutional trades remain muted, with no evidence of outsized inflows or outflows that might disrupt the market’s current direction.

Market sentiment remains cautious. Analysts point to the peso’s outperformance as a function of strong remittance flows and moderating inflation, but warn that fiscal risks and declining oil revenues could reverse the trend if not addressed.

Forecasts for the coming months suggest a wide trading range, with the peso vulnerable to local fiscal developments and external shocks.In summary, the Colombian peso’s strength reflects both solid technicals and supportive, if fragile, fundamentals.

The market’s focus remains on fiscal policy and global commodity prices, with traders watching for any sign of reversal as the second half of the year approaches.

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