Mexican peso strengthens as Trump delays tariffs on Mexico

Foreign exchange market data reveals the Mexican peso strengthened to 20.28 against the US dollar this morning. The currency appreciated 0.45% in the past 24 hours, building on gains from yesterday’s opening rate of 20.44.

President Trump’s announcement that Mexico would avoid tariffs on USMCA-covered products fuels the peso’s rise. Trump highlighted improved bilateral relations, stating, “Our relationship has been very good, and we work hard together on the border.”

Reciprocal tariffs now face postponement until April 2 following talks between Mexico‘s President Sheinbaum and President Trump. This delay gives investors breathing room to reconsider defensive positions against the peso.

Disappointing US labor statistics further weakened the dollar across markets. February’s ADP employment report showed just 77,000 new jobs, far below expectations of 140,000. US Jobless Claims hit 221,000 while Challenger Job Cuts surged to 172,017 in February.

Technical analysts note the USD/MXN pair broke below the critical support level of 20.38. This breakthrough suggests potential for additional peso gains with next support at 20.15.

The peso currently trades below its 100-day Simple Moving Average of 20.33. This position strengthens the bullish short-term outlook for the Mexican currency despite cautious trading volumes.

Investors now focus on today’s US Nonfarm Payrolls report. This data could significantly impact Federal Reserve policy expectations and the USD/MXN exchange rate.

Banxico’s recent survey projects the USD/MXN rate to end 2025 at 20.85, slightly better than previous forecasts. Longer-term projections suggest peso weakness, with 2026 rates potentially exceeding 21.30.

Upcoming February inflation data will provide crucial insights into Banxico’s monetary policy direction. Analysts expect headline inflation to rise to 3.77% year-over-year from January’s 3.59%.