Mexican Peso Softens, Equities Hit Air Pocket After Friday’s Heavy Selloff
| KEY POINTS |
| • USD/MXN rebounded to ~17.49 as late-January peso strength looked stretched; daily RSI remains oversold at 24.8
• Mexico’s IPC plunged 2.72% on Friday to 67,598.95—heaviest single-session loss since April 2025 • Mining sector led the rout: PE&OLES collapsed 13.4%, GMEXICOB fell 7.0% on commodity weakness • 4H charts signal short-term dollar bounce risk; IPC vulnerable to further profit-taking near 67,000 support |
TECHNICAL LEVELS AT A GLANCE
| USD/MXN Support | USD/MXN Resistance | IPC Support | IPC Resistance |
|---|---|---|---|
| 17.32 (immediate) | 17.57 (initial) | 67,000 (psychological) | 68,000 (near-term) |
| 17.26 (Jan low) | 17.73–17.77 (cluster) | 66,500 (50-DMA zone) | 68,900 (all-time high) |
| 17.11 (channel base) | 17.98 (200-DMA) | 65,100 (100-DMA) | 69,500+ (extension) |
USD/MXN: DOLLAR BOUNCES OFF OVERSOLD EXTREMES
The tone shifted abruptly heading into February. After testing fresh cycle lows near 17.11 in late January, USD/MXN snapped higher on Monday, trading around 17.49 by early European hours.
The daily session showed a range of 17.30–17.57, with price closing near 17.32—a clear rebound day for the greenback after an extended peso rally.
The move was not entirely unexpected. The weekly chart shows the pair deeply oversold, with RSI plunging below 28—levels not seen since the peso‘s powerful rally in mid-2023.
The MACD histogram has been printing progressively smaller red bars, hinting at waning downside momentum despite the trend remaining firmly bearish.
The daily timeframe tells a similar story. RSI at 24.8 signals extreme oversold conditions, while the pair is trading well below all major moving averages.
The 200-day MA sits near 17.98, now acting as the first major overhead barrier. The Bollinger Bands have narrowed following the rapid decline, with price testing the lower band repeatedly through January.
The four-hour chart captures the intraday dynamics of Monday’s bounce. Price snapped higher from the late-January base around 17.11 and pushed through several short-term moving averages in quick succession.
The 4H RSI has recovered to 56.4, establishing a clear positive divergence against the still-depressed daily readings. This gap often signals a corrective bounce inside a broader bearish trend.
Key watch: A move back under 17.32 would revive peso momentum toward the 17.11 channel base. Conversely, a sustained push above 17.57 would confirm the bounce has legs, targeting the 17.73–17.77 cluster where several moving averages converge.
S&P/BMV IPC: HEAVY RISK-OFF SESSION ROCKS MEXICAN EQUITIES
Mexican equities were Friday’s bigger story. The IPC closed at 67,598.95, shedding 1,893.48 points (-2.72%) in the heaviest single-session selloff since April 2025.
Volume surged to 221.15 million shares, well above the 30-day average, signaling institutional participation in the unwind rather than a thin liquidity anomaly.
The damage was concentrated in materials and financials. PE&OLES collapsed 13.42% as precious metals broke key technical levels globally.
GMEXICOB followed with a 7.0% decline, dragging the mining complex to its worst day in months. Financial heavyweights GFNORTEO (-3.55%), GENTERA (-3.37%), and BBAJIOO (-3.37%) compounded the losses, reflecting broader risk aversion into month-end.
The weekly chart shows the broader context remains constructive. The IPC’s rally from mid-2024 lows near 51,000 to record highs above 69,000 has been orderly, respecting the rising 20-week and 50-week moving averages throughout.
Friday’s candle looks severe on the daily but appears as normal profit-taking on the weekly timeframe—at least for now. The daily chart paints a more cautious picture. The index gapped lower and closed near session lows, with no meaningful intraday recovery attempt.
RSI has pulled back to 54.5 from overbought territory, suggesting there may be room for further consolidation before buyers step in. The 67,000 psychological level and 50-DMA around 66,500 represent the next meaningful support zone.
The four-hour chart offers a glimmer of hope for bulls. Despite Friday’s carnage, the 4H RSI remains elevated at 66.4, suggesting momentum has not completely collapsed.
The MACD histogram has turned negative but remains near zero. A hold above 67,000 early this week could stabilize sentiment; a breakdown risks extending the correction toward 65,000–65,500.
FRIDAY’S STANDOUTS: WINNERS & LOSERS
The bifurcation between defensive consumer names and cyclical sectors was stark. Televisa (TLEVISACPO, +2.60%) led the winners as investors rotated into media names with stable cash flows.
Consumer staples like Coca-Cola FEMSA (KOFUBL, +1.83%) and Bimbo (BIMBOA, +1.27%) also found buyers seeking shelter from the commodity-led selloff.
| TOP WINNERS | TOP LOSERS | SECTOR NOTE | ||
|---|---|---|---|---|
| TLEVISACPO | +2.60% | PE&OLES | -13.42% | Mining collapse |
| LABB | +2.07% | GMEXICOB | -7.00% | Financials weak |
| KOFUBL | +1.83% | GFNORTEO | -3.55% | Consumer stable |
| BIMBOA | +1.27% | GENTERA | -3.37% | Regional banks hit |
| LIVEPOLC-1 | +1.07% | BBAJIOO | -3.37% | Defensive bid |
WEEK AHEAD: POSITIONING & CATALYSTS
The week opens with markets digesting Friday’s volatility spike. For USD/MXN, the technical setup favors a near-term bounce toward the 17.57–17.77 zone, though the broader downtrend remains intact while below 17.98.
Traders will watch for follow-through on Monday’s dollar bid—failure to hold above 17.40 would reopen the door to another test of 17.11.
For equities, the IPC faces a critical test at the 67,000 level. The silver lining is that Friday’s selloff was largely sector-specific (mining, financials) rather than broad-based capitulation.
Consumer and defensive names holding firm suggests the underlying bid remains, but a second distribution day this week would raise concerns about a deeper correction.
| Key events this week: Banxico minutes (Wed), Mexico CPI (Thu), US employment data (Fri). Any dovish shift in Banxico communications could reignite peso strength; hotter US jobs data would support the dollar bounce thesis. |
Disclaimer: This note is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always conduct your own research before making investment decisions.
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