Peso’s Rally Pauses: U.S. Economic Strength Lifts Dollar Against Mexican Currency

Official data from the Mexican Central Bank and market charts show the US dollar traded at 18.75 Mexican pesos at the close of July 2, 2025. The peso held its ground after a volatile session, with the exchange rate rising 0.34% from the previous day’s 18.68.

The market opened July 3 near 18.78, reflecting a cautious mood among traders. The last 24 hours saw the peso lose some of its recent strength. The dollar’s modest recovery followed a string of US economic releases that beat expectations.

The ISM Manufacturing PMI and job openings data both came in stronger than forecast, which supported the greenback. At the same time, Mexican economic indicators disappointed.

Retail sales growth stalled, and the S&P Global Manufacturing PMI dropped to its lowest level since early 2021. These figures signaled weaker domestic demand and project delays in Mexico, which weighed on the peso.

Traders watched the US-Mexico yield gap closely. Banxico’s policy rate remains at 8.50%, but the central bank has signaled caution due to slowing growth.

US rates remain steady, but the market’s focus has shifted to upcoming US employment data and the ongoing debate over the US budget bill. These events have increased uncertainty and led to choppy trading conditions.

Technical analysis of the daily chart shows the USD/MXN pair remains in a broad downtrend. The price stays below the 50-day and 200-day moving averages, which signals persistent bearish sentiment.

However, the session produced a small bullish candle, hinting at a possible short-term correction. The Relative Strength Index (RSI) hovers near 35, close to oversold territory, which often precedes a technical bounce.

The Moving Average Convergence Divergence (MACD) indicator shows bearish momentum fading, with the histogram contracting and a potential bullish crossover forming.

Bollinger Bands on the daily chart remain wide, reflecting recent volatility. The price sits near the lower band, which can indicate oversold conditions. Support levels around 18.70 held firm during the session, while resistance near 18.90 remains intact.

The four-hour chart confirms a short-term recovery, with the pair consolidating above immediate support and the MACD showing a bullish crossover. The RSI on this timeframe rebounded to 47, suggesting momentum has shifted in the short run.

No official data on trading volumes or ETF flows emerged for the session. However, the size of the move and the reversal from recent lows suggest increased activity as traders adjusted positions ahead of key US data releases.

The peso’s performance over the last day reflects a tug-of-war between resilient US data and weaker Mexican fundamentals. Technical signals point to a possible corrective bounce, but the broader trend remains bearish for the dollar against the peso.

Traders remain cautious and are watching for further signals from both economies, especially unless the pair breaks above 19.00 with strong volume.

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