The Mexican Peso (MXN) appreciated against the US Dollar (USD), trading at 19.86, down over 1%. Economic data from Mexico indicated a decline in Consumer Confidence and Industrial Production, with growth for Q4 falling by 0.6% compared to the previous quarter.
The University of Michigan’s Consumer Sentiment Index in the US also dropped from 64.7 to 57.9. As inflation expectations increased, traders are closely watching next week’s Federal Reserve policy decisions, anticipating potential easing measures.
Mexican Industrial Production Decline
Mexico’s Industrial Production fell by 2.9% YoY, worse than the previous December’s decline. Banxico projects a nationwide growth of only 0.81% amid ongoing trade tensions with the US, with economists concerned about recession risks in North America. As the USD/MXN pair approaches critical technical levels, the short-term outlook appears bearish.
The peso gained strength against the dollar, slipping below the 20.00 mark, marking a decline of more than 1% for the US currency. Fresh economic figures from Mexico, however, paint a less optimistic picture. Consumer sentiment took a hit, and the latest data on industrial production showed an even steeper year-on-year downturn than in previous months. Fourth-quarter growth also contracted by 0.6% from the prior quarter, raising concerns about broader economic momentum.
Across the border, consumer confidence in the US, as measured by the University of Michigan, posted a sharp drop, sliding from 64.7 to 57.9. Inflation expectations have ticked higher, placing additional pressure on policymakers. All eyes are on the Federal Reserve’s upcoming policy decisions, as traders assess the likelihood of more accommodative measures in response to softening data. A shift in tone from Fed officials next week could ripple through the markets, particularly for those exposed to foreign exchange swings.
On the domestic front, Mexico’s industrial sector continues to struggle, with a 2.9% annual contraction—worse than the decline recorded in December. Banxico remains cautious, forecasting GDP growth of just 0.81% amid persistent trade frictions with the US. The possibility of economic strains deepening in North America is weighing on sentiment, prompting a reassessment of risk exposure.
Technical Outlook For Usd Mxn
From a technical standpoint, the dollar-peso pair is nearing key support levels, suggesting further downside may be on the horizon. Short-term positioning has turned more bearish, with traders likely to tread carefully in the coming weeks.
