Mexico IPC Rebounds Toward 70,000 as Peso Holds Near 2024 Highs

Mexico’s S&P/BMV IPC index extended its recovery on Tuesday, climbing approximately 1% as buyers returned following last week’s sharp correction from record highs reached on January 29.

The benchmark is now testing the 69,700-level as investors position cautiously ahead of Banco de México’s interest rate decision on Wednesday, while the Mexican peso consolidated near its strongest levels since mid-2024.

Key Market Data

Performance Analysis

The IPC index posted a solid session on Tuesday, rising approximately 1% as the benchmark continued to recover from last week’s pullback.

The index had reached an all-time high near 69,827 points on January 29 before profit-taking drove prices lower in the final sessions of January.

Tuesday’s advance brings the IPC back within striking distance of those record levels, with the index now trading just 0.15% below its peak.

The recovery has been supported by sustained buying interest across the index’s major components, including Grupo México, América Móvil, and Walmart de México.

Trading volumes have normalized following last week’s elevated turnover during the selloff, suggesting the correction may have run its course.

Year-to-date, the IPC has gained approximately 5.9%, building on 2025’s remarkable 35% advance that made Mexico one of the world’s best-performing equity markets.

The Mexican peso consolidated near its strongest levels since June 2024, with USD/MXN holding steady around 17.22 after briefly touching 17.13 last week.

On the week, the peso has appreciated 1.34% against the dollar, extending a rally that has seen the currency strengthen roughly 16% over the trailing twelve months.

The peso’s stability ahead of tomorrow’s Banxico decision suggests markets have largely priced in an expected pause in the easing cycle.

Key Drivers

Three factors continue to underpin Mexican asset strength. First, December inflation data showing headline CPI moderating to 3.69% from 3.80% has reinforced confidence that Banxico‘s disinflation process remains on track despite persistent core inflation above 4%.

The better-than-expected reading supports the central bank’s projection that price growth will converge to its 3% target by the third quarter of 2026, allowing policymakers flexibility to maintain supportive financial conditions.

Second, the peso’s sustained appreciation reflects Mexico’s attractive 325-basis-point interest rate differential versus the United States, which continues to draw carry trade flows even as Banxico gradually normalizes policy.

The currency touched 17.13 per dollar last week—its strongest since mid-2024—as foreign investors accumulated peso-denominated assets.

Nearshoring-driven foreign direct investment has provided a structural underpinning for the currency beyond cyclical carry dynamics.

Third, expectations for modest economic recovery in 2026 have supported equity valuations. While GDP contracted 0.2% in Q3 2025 and growth remains sluggish, Banxico projects 1.1% expansion in 2026 followed by 2% in 2027.

The upcoming FIFA World Cup, co-hosted by Mexico in mid-2026, is expected to provide an additional consumption tailwind.

Vanguard economists noted that roughly 80% of Mexican exports remain duty-free under USMCA provisions, positioning the country favorably amid global trade tensions.

Technical Outlook

The IPC’s technical structure remains constructive following the recovery from last week’s lows. The 14-day RSI at 64.47 indicates bullish momentum without overbought conditions, providing room for a potential push toward the psychological 70,000 level.

Key resistance sits at the January 29 all-time high near 69,827, with the round number at 70,000 representing the next major hurdle.

Support is layered at the 10-day exponential moving average around 68,722 and the 20-day simple moving average near 67,142.

The peso’s technical picture shows USD/MXN in oversold territory on both daily (RSI 32.19) and weekly (RSI 26.64) timeframes, suggesting potential for a corrective bounce in the dollar.

The pair has been trading below its descending 200-day moving average since late 2025, confirming the broader peso uptrend.

However, oversold conditions and tomorrow’s Banxico decision create risk of a short-term reversal if policymakers deliver unexpectedly dovish guidance.

Analyst Perspectives

“We expect Banxico to remain on hold in the coming months as it assesses the temporary inflation shocks anticipated in early 2026.

The strength of the peso and weakness in domestic demand give the board room to pause without risking a significant inflation overshoot,” wrote economists at BBVA Research in their latest Mexico outlook.

FXStreet analysts highlighted risks to the peso’s rally: “While supportive fundamentals could extend peso resilience early in 2026, the balance of risks is shifting.

Gradual Banxico easing, potential Bank of Japan normalization, and carry trade unwinding suggest forces that powered the peso’s outsized 2025 gains may fade. The USMCA review introduces tail risks that could periodically pressure the currency.”

Looking Ahead

Tomorrow’s Banxico decision represents the near-term catalyst, with markets pricing a pause at 7.00% while policymakers assess January inflation and the impact of new excise taxes.

A close above the 69,827 record high would signal resumption of the primary uptrend, while failure at resistance could trigger consolidation in the 68,000-70,000 range.

This is part of The Rio Times’ daily coverage of Mexican markets and Latin American financial news.

For regional context, see the Brazil’s Ibovespa report: Brazil’s Ibovespa.

For regional context, see the Argentina’s Merval report: Argentina’s Merval.

This article was drafted with automated assistance and reviewed before publication. How we use AI · Report an error