USD/MXN Outlook:
Bearish, with the rate trading significantly below its recent average and nearing recent lows.
Key drivers:
• Rate gap: The Federal Reserve's decision to hold interest rates steady contrasts with the Bank of Mexico's earlier rate cuts, making the peso more attractive.
• Risk/commodities: Ongoing geopolitical tensions are contributing to a decreased demand for the USD, which undermines its value.
• One macro factor: Weaker-than-expected U.S. retail sales and job data have raised concerns about the strength of the U.S. economy.
Range:
The USD/MXN may continue to hold near current levels but could also drift toward recent lows.
What could change it:
• Upside risk: An unexpected rebound in U.S. economic indicators could strengthen the dollar.
• Downside risk: Escalating trade tensions or further weakening U.S. data might push the peso higher against the dollar.
