Dollar Weakness Drives Mexican Peso Gains Further as Technicals Confirm Market Reluctance

Official exchange data for June 25, 2025, show the Mexican peso closing at 19.00 per US dollar, modestly stronger than the previous session.

The peso’s resilience reflects a broader pattern of dollar softness that has persisted through the first half of 2025. This trend is not accidental. Market participants widely attribute it to a combination of US monetary policy shifts and fiscal expansion.

They also point to the Trump administration’s hidden preference for a weaker dollar to support American manufacturing. The dollar’s retreat has become a defining feature of global markets this year.

According to JP Morgan and other major financial institutions, the greenback has lost as much as 10% against major currencies since January, marking its steepest first-half decline since the aftermath of the Plaza Accord in the 1980s.

Analysts point to the Federal Reserve’s earlier-than-expected rate cuts and sustained fiscal deficits as key drivers. The US government’s infrastructure and defense spending, combined with persistent inflation, have pressured the Federal Reserve to ease policy.

This has reduced the appeal of dollar-denominated assets. Credit agencies have responded with warnings about US debt sustainability, further weighing on sentiment.

The Trump administration’s stance has amplified these moves. While officials publicly deny targeting the currency, they have made clear their intent to boost US export competitiveness.

This approach has encouraged investors to expect a softer dollar, which in turn has fueled capital flows into emerging markets, including Mexico. Technical analysis of the USD/MXN pair confirms the market’s reluctance to bet on a dollar rebound.

The daily chart shows the pair trading well below the 50-day and 200-day moving averages, with the Ichimoku cloud and all major moving averages acting as resistance.

The MACD remains negative, and the histogram shows no sign of momentum reversal. The RSI sits at 37, close to oversold but not yet at extremes. Bollinger Bands indicate persistent selling pressure, with price action near the lower band and low volatility.

The four-hour chart reinforces these findings. The pair remains below all key moving averages, with the MACD and RSI both confirming a sustained downtrend. No technical indicator signals an imminent reversal.

Instead, the charts suggest the market expects continued dollar softness and is unwilling to challenge the prevailing trend. Fundamentally, Mexico’s own position remains mixed. The central bank maintains rates near 11%, supporting the peso through carry trades.

Oil prices and trade flows have helped, but domestic growth remains weak and inflation is above target. The peso’s gains are not a sign of local strength but a reflection of global capital seeking alternatives as the US dollar loses its shine.

In summary, the real story is that the peso’s advance is a byproduct of deliberate US policy and global capital reallocation, not a sudden improvement in Mexico’s fundamentals.

Technicals and fundamentals align: the market is not betting on a dollar comeback, and the Trump administration’s mercantile strategy is shaping currency flows across the Americas.