Mexican Peso Strengthens as Rate Cut Looms, Technicals Confirm Downtrend

The Mexican peso gained ground against the US dollar over the last 24 hours, with the USD/MXN exchange rate falling to 19.04 late on June 24, 2025, from 19.25 the previous day.

This marks a 1.11% daily appreciation for the peso, continuing a trend of strength seen in June. The data comes from the Mexican Central Bank and market close figures.

The peso’s rally unfolded as traders positioned for the Bank of Mexico’s (Banxico) monetary policy decision set for later this week. The consensus among economists, as confirmed by Citi’s June 20 survey, expects Banxico to cut its benchmark rate by 50 basis points.

Core inflation, which strips out volatile items, edged up to 4.20%. Analysts note that while inflation is still uncomfortable, especially in services, Banxico’s forward guidance may turn more cautious if inflation persists.

On the technical front, the charts for USD/MXN show a firmly entrenched downtrend. The 4-hour and daily charts both display the pair trading below the 50, 100, and 200-period moving averages.

Peso Gains Ground as Technicals Align with Solid Fundamentals

The MACD on both timeframes remains negative, with the histogram deepening, which signals continued bearish momentum. The Relative Strength Index (RSI) sits at 38.6 on the 4-hour and 37.6 on the daily.

Both are near oversold territory but not yet at levels that typically trigger a reversal. Bollinger Bands on both charts show price hugging the lower band, indicating persistent selling pressure and limited volatility expansion.

Volume data, while not explicitly published for the spot FX market, aligns with the observed price action: the decline in USD/MXN has not triggered a spike in volatility, suggesting steady rather than panicked flows.

ETF and cross-border portfolio flow data for the day remain limited, but the peso’s resilience points to ongoing foreign interest in Mexican assets, especially as the carry trade remains attractive even with a potential rate cut.

Macroeconomic fundamentals underpin the peso’s move. The US Federal Reserve left its benchmark rate unchanged at 4.25–4.50% last week, but signaled possible cuts later in the year.

This has weighed on the dollar broadly, while Mexico’s relatively high real rates and improving fiscal outlook have supported the peso. The trade balance and remittance inflows continue to provide a buffer for the currency, with no major disruptions reported.

Market participants remain focused on Banxico’s meeting and any signals about the pace of future cuts. If the central bank hints at a slower pace, the peso could find further support. However, persistent inflation risks could cap further gains.

In summary, the peso’s advance over the last 24 hours reflects both technical momentum and anticipation of Banxico’s next move, with fundamentals and macro policy shifts setting the tone for the days ahead.