Mexican Peso Strengthens as Dollar Slips: Technicals Signal Persistent Downtrend

The Mexican peso extended its winning streak against the US dollar on July 1, 2025, as official exchange data confirmed the USD/MXN pair closed at 18.74, marking a fresh 2025 low.

Market data show the peso gained momentum throughout the day, with the exchange rate falling from an early session high near 18.85 to the close, reflecting a persistent bearish trend for the dollar.

The past 24 hours saw the peso’s appreciation driven by a combination of macroeconomic and market-specific factors. The dollar weakened broadly as uncertainty grew around the US fiscal outlook and ongoing debates in the US Senate over a new spending bill.

Traders also cited reduced noise over US-Mexico tariffs, which helped calm financial institutions and encouraged speculative selling of the dollar. The market’s focus shifted to upcoming U.S. risk events.

These include the Non-Farm Employment Change report and the July 9 tariff deadline, both of which could inject further volatility. Technical analysis of the USD/MXN charts underscores the peso’s dominance.

On the four-hour chart, the pair remains entrenched in a clear downward channel, with price action consistently below the 200-period moving average. Shorter-term moving averages reinforce this bearish structure, as each rally attempt quickly meets resistance and fades.

USD/MXN Trends Downward Amid Selling Pressure

The MACD histogram shows a slight uptick, but both the MACD and signal lines remain negative, confirming the prevailing downtrend. The Relative Strength Index (RSI) has rebounded from oversold levels to around 40, indicating some stabilization but no sign of a reversal.

The daily chart paints a similar picture. The USD/MXN has steadily declined since April, with the pair trading below all major moving averages. The MACD remains negative, while the RSI hovers near 37, suggesting the market is approaching but not yet reaching extreme oversold territory.

Bollinger Bands have narrowed, reflecting reduced volatility, but the price continues to hug the lower band, signaling ongoing selling pressure. Support and resistance levels have become focal points for traders.

The 18.70 area acts as immediate support, with a break potentially opening the way to further declines. Resistance stands at 18.77 to 18.80, where selling pressure has repeatedly capped rallies.

Market participants report robust liquidity and steady volumes as investors position ahead of key US data releases. Fundamentals continue to favor the peso. Despite a recent rate cut by Banxico, Mexico’s real yields remain attractive compared to the US, drawing capital inflows.

The dollar’s weakness reflects concerns over US fiscal discipline and the potential for further rate cuts by the Federal Reserve. As the peso trades at its strongest level of 2025, traders remain alert to risk events that could disrupt the current trend.

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