The Mexican Peso (MXN) is trading within a narrow range, with tepid gains and losses in its most heavily-traded pairs. While the peso benefited from the Federal Reserve’s (Fed) rate cut last week, it has faced downward pressure from concerns about Mexico’s economic outlook and the potential impact of recent judicial reforms.
Economic Outlook
Capital Economics maintains a negative outlook for the Mexican Peso, citing concerns about Mexico’s public finances and the potential impact of the judicial reforms on foreign investment. The firm forecasts further depreciation for the peso in the coming years.
US Dollar
The US Dollar (USD) has strengthened, which has put downward pressure on the Mexican Peso. The Fed’s rate cut has increased the interest rate differential between the US and Mexico, making the USD more attractive to investors.
USD/MXN Technical Analysis
The USD/MXN pair is consolidating near the bottom of a rising channel. A break below the lower channel line and 50-day Simple Moving Average could signal a continuation of the downtrend. However, there is also a risk of a recovery and a return to the upward trend.