Insights 
VT 
Recovery Challenges
USD/MXN has recovered from a low of 18.20 but struggles against the 50-day moving average (50-DMA). For a more extended recovery, it must break above 18.65; otherwise, it might face further downward pressure, according to Société Générale’s analysts.
Currently, the bounce follows an interim low near 18.20 from the previous month. Despite positive divergence in the daily MACD showing reduced downward momentum, a rise beyond the 18.65 pivot high is needed to confirm a sustained rebound.
If USD/MXN fails to surpass 18.65, there’s a risk of another decline. These insights come from a team that selects market observations published by experts, incorporating comments from both commercial and additional analysts.
The USD/MXN pair is currently at a decisive point for us following its bounce from the 18.20 level last month. It is now testing resistance at the 50-day moving average, a common technical barrier for currency trends. We are watching the 18.65 level as the key signal for where the pair is headed next.
If we see a sustained break above 18.65, traders should consider this a bullish signal for the dollar. This move could be played by buying call options to capitalize on a potential extended recovery towards the 19.00 handle. This view is supported by recent minutes from the US Federal Reserve’s September 2025 meeting, which revealed a more hawkish split among members than the market had priced in.
Conversely, if the pair fails to overcome the 18.65 resistance, it would suggest the recent bounce is losing steam. In this scenario, buying put options could be a prudent strategy to prepare for a potential decline back towards the 18.20 lows. Mexico’s latest inflation report, released on October 8, 2025, showed a slight uptick to 4.6%, creating uncertainty about whether Banxico will continue its easing cycle.
Indecision At Key Level
The current situation is underlined by fading downward momentum, but fundamental factors remain critical. We’ve noted that US Commerce Department data for the third quarter of 2025 showed that nearshoring investment into Mexico slowed for the first time in two years. We remember how rate differentials drove sharp, unexpected moves back in early 2024, so a catalyst could easily emerge.
Given this indecision at a key technical level, implied volatility on USD/MXN options has ticked higher. For those expecting the pair to remain range-bound in the immediate future, selling a short-term strangle could be an effective strategy to collect premium. This approach benefits from a lack of a decisive breakout in either direction ahead of the next major economic data releases.
