The USD/MXN exchange rate continued its strong downward trend, reaching its lowest level since June 2024 as the Mexican peso gained momentum after the Supreme Court ruling on Donald Trump's tariffs. It dropped to 17.1325 on Friday, much lower than last year's high of 21.28.
Mexican Peso Soars After Trump Tariff Setback
The Mexican peso continued rallying after the Supreme Court ruled against Donald Trump's tariffs, a move that will benefit the Mexican economy, which does a lot of trade with the United States.
Mexico will benefit as Trump has been forced to slash the tariffs he implemented last year. Most importantly, it means that the president will likely not go ahead with his recent threat on exited the USMCA deal he negotiated in his first term.
The USD/MXN exchange rate will next react to the upcoming Mexican economic data. Economists expect the report to show that the economy expanded by 0.8% in the fourth quarter after slumping by 0.3% in the third quarter.
On an annual basis, analysts expect that the economy expanded by 1.6%, helped by the rising exports and consumer spending.
The USD/MXN pair will next react to more macro data from the United States, including the upcoming consumer confidence and house price index data. These numbers will come a few days after the US published the weak GDP report, which showed that the economy expanded by 1.4% in the fourth quarter.
The pair will also react to the upcoming statements by top Federal Reserve officials like Raphael Bostic, Michele Bowman, Lisa Cook, and Christopher Waller. Minutes released last week showed that some officials considered interest rate hikes in the last meeting.
USD/MXN Technical Analysis
The weekly chart shows that the USD/MXN exchange rate remained in a strong downward trend in the past few months. It formed a death cross pattern in October last year.
The pair has moved below the key support level at 18.20, its lowest level in September last year. Also, the Relative Strength Index (RSI) and the Percentage Price Oscillator (PPO) have continued falling in the past few months.
The most likely scenario is where the pair continues falling, potentially to the key support level at 16.63, its lowest level in July 2023.