Mexican Peso Holds Firm as USD/MXN Slides Toward Key Support, Market Eyes U.S. Inflation Data

The Mexican peso maintained its rally against the US dollar over the past 24 hours, with the USD/MXN pair trading near 19.05 as of June 11, 2025.

Official sources show the exchange rate averaged 19.0595 pesos per dollar during the session, marking a minor decline of 0.05% from the previous day.

This level keeps the peso near its strongest point in more than nine months, with the trend reflecting a persistent defensive posture for the dollar. Market participants attributed the peso’s resilience to ongoing trade negotiations between the US and Mexico.

Both governments discussed a possible reduction or removal of steel tariffs, which could allow US companies to import Mexican steel tariff-free within historical volume limits.

This development supported the peso by improving sentiment around Mexican exports and future trade flows. Traders also focused on the imminent release of US Consumer Price Index (CPI) data for May.

The consensus expects a 2.5% annual increase in headline inflation and 2.9% for core inflation. Market participants believe that softer-than-expected inflation could further weaken the US dollar, while a stronger reading might trigger a reversal in the peso’s recent gains.

The US Federal Reserve’s cautious stance, with rates expected to remain at 4.25%-4.50%, has kept the dollar under pressure. Most economists in recent polls anticipate no change in US rates, citing inflation risks from ongoing tariff policies.

Macroeconomic fundamentals continue to favor the peso. The interest rate differential remains wide, with Mexico’s central bank rate at 8.50%, providing a strong carry incentive for investors.

However, recent US GDP data showed a surprise contraction of -0.2%, raising concerns about demand for Mexican exports. While this poses a risk to Mexico’s economy, the peso has so far shrugged off these worries, buoyed by external flows and stable domestic conditions.

USD/MXN Technical Outlook Signals Continued Bearish Momentum

Technical analysis of the daily and four-hour charts confirms the bearish trend for USD/MXN. The daily chart shows the pair trading well below the 50-day and 200-day simple moving averages, with the price hugging the lower Bollinger Band.

The Ichimoku Cloud remains above the current price, reinforcing the downtrend. On the four-hour chart, the pair continues to make lower highs and lower lows, with moving averages and the cloud acting as resistance.

No significant volume spikes suggest the move remains orderly. Support at 19.00 stands out as a critical level. A decisive break below this threshold could accelerate losses toward the next major support near 18.99.

Conversely, any rebound above 19.10 would signal a pause in the peso’s advance, but technical momentum currently favors further downside for USD/MXN.

In summary, the peso’s strength reflects a mix of favorable fundamentals, cautious US monetary policy, and technical signals pointing to continued downside for the dollar. Market attention now turns to US inflation data, which could determine the next leg for the pair.

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