Mexian Peso Holds Firm as Dollar Slips: Technical Breakdown Signals More Pressure

Official data from the Bank of Mexico and the European Central Bank confirm that the Mexican peso continued its advance against the US dollar on June 4, 2025.

The exchange rate closed at 19.21 pesos per dollar, down from 19.24 the previous day. This marks a new low for the dollar since October 2024 and extends a decline that began in late May.

The last 7 days saw the dollar attempt a mild rebound in early trading, but sellers quickly regained control. The peso traded between 19.2478 and 19.1621, with the session’s close near the lower end of that range.

The move reflects a clear break below several key technical levels. The 4-hour chart shows the dollar trading under the 20, 50, and 200-period simple moving averages, as well as beneath the Ichimoku cloud.

The MACD line sits below its signal line, confirming downward momentum. The Relative Strength Index hovers near 40, not yet oversold but showing persistent bearish pressure. Bollinger Bands indicate the price is pressing against the lower band, signaling increased volatility and a possible continuation of the trend.

Volume during the session did not spike, suggesting the move lacked the panic selling seen in sharper corrections. Instead, the market shows a steady, controlled decline.

The technical setup points to further downside risk for the dollar if it fails to reclaim the 19.18 support level. Should the pair fall below 19.15, it could test lows not seen since early 2023.

Fundamentals back the peso’s strength. The US Dollar Index fell 0.51% as investors responded to renewed US-China trade tensions and weaker US economic data.

The Mexican central bank’s recent rate cut to 8.5% has not deterred investors, as Mexico’s inflation remains near 3.9% and the country’s exports to the US hit record highs in May.

Private investment in Mexico continues to rise, with over $45 billion in new projects announced for the first half of 2025. US economic data, including slower growth and rising trade tensions, weigh on the dollar.

Meanwhile, Mexico’s relative insulation from new US tariffs and steady remittance inflows support the peso. The Federal Reserve’s cautious stance on rate cuts also limits dollar upside.

Market participants now focus on the 19.18 support level. A sustained break below this could open the door to further peso gains. If the dollar manages to recover above 19.30, it would challenge the current bearish outlook, but technical and fundamental factors both suggest that the path of least resistance remains downward for now.

The peso’s recent performance highlights the importance of technical signals and macroeconomic fundamentals in shaping currency moves. The next sessions will test whether this momentum can persist amid ongoing global uncertainty.