Mexican Peso Weakens Modestly as Market Eyes Central Bank and Trade Policy

On April 29, 2025, figures from TradingView and official market sources show the Mexican peso trading at 19.60 per US dollar, slightly weaker than the previous day.

The peso lost ground over the last three sessions, with the USD/MXN rate rising from 19.53 on April 28 to 19.61 by the morning of April 29. This move marks a modest but clear weakening of the peso after a period of relative stability.

The hourly chart confirms this trend. After trading sideways for much of April 27 and April 28, the dollar began to strengthen against the peso late on April 28.

The exchange rate pushed above short-term moving averages and approached the upper Bollinger Band, signaling renewed buying interest in the dollar.

The 200-period moving average remains well above the current rate, showing the broader trend still favors the peso, but recent sessions have shifted momentum in the dollar’s favor.

Several factors explain this shift. The Bank of Mexico’s recent signals about further interest rate cuts have weighed on the peso. The central bank cut its benchmark rate to 9.5% in February and hinted at continued easing as inflation cooled and economic growth slowed.

Mexican Peso Faces Challenges Amid Yield Narrowing

With the consensus now expecting another 50-basis-point cut, the peso’s yield advantage has narrowed, prompting some investors to reduce exposure. Trade policy uncertainty also played a role.

While a recent call between Presidents Trump and Sheinbaum eased immediate fears of new US tariffs on Mexican exports, the risk remains. Markets remain sensitive to any signals about tariffs or broader trade disruptions.

Traders have grown cautious as the US administration prepares for potential new measures. Mexican economic data remains mixed. Unemployment hit a record low of 2.2% in March, and core inflation accelerated to 3.9% in mid-April.

However, GDP forecasts have been revised downward, with consensus now expecting just 0.5% growth for 2025. Export figures have softened, and remittances declined, adding to concerns about the country’s external accounts.

Technical analysis supports the current market view. The pair found support near 19.50 and moved toward resistance at 19.65. The rejection of recent lows and the move higher show that sellers lost momentum and buyers stepped in as the peso weakened.

The price action fits the seasonal pattern, which often sees the peso lose ground to the dollar in late April. Looking ahead, the peso’s direction will depend on the central bank’s next move and any developments in US-Mexico trade policy.

For now, the peso has weakened modestly, and the market remains cautious, watching for further signals from policymakers and economic data.