Insights 
VT 
The Mexican Peso is continuing to gain against the US Dollar, influenced by several factors. These include Mexico’s drop in consumer confidence, Federal Reserve speeches, and anticipated US-China trade talks in Switzerland.
Currently, the USD/MXN exchange rate is below 19.500, experiencing a decline of 0.24%. Future movements depend on shifts in sentiment related to Federal Reserve policy, domestic economic data, and international trade issues.
Mexicos Consumer Confidence Index
Mexico’s Consumer Confidence Index drastically decreased in April, dropping from 64.1 to 45.5 according to INEGI. Despite this, the USD/MXN rate remained relatively stable as markets have already factored in a weaker domestic outlook and potential Banxico rate cuts.
Interest rate differences and policy divergence between Banxico and the Federal Reserve remain critical influences on USD/MXN. Federal Reserve officials provided insights into the economic landscape, focusing on the labour market and inflation challenges related to recent trade tariffs.
USD/MXN is trading above 19.50, with its trend staying downward, struggling to surpass the 10-day Simple Moving Average at 19.59. A move above this average could indicate potential bullish momentum, whereas dipping below 19.50 might lead to further declines. The Relative Strength Index suggests room for sellers to maintain control barring a reversal trigger.
While only briefly regaining its footing above 19.50, the USD/MXN has since slipped again, with momentum indicators continuing to favour further downside pressure in the near term. The broader market seems to be digesting the contrasting narratives on both sides of the border, and the weight is clearly falling more heavily on the USD side for now.
Federal Reserve And International Relations
Consumer confidence in Mexico experienced a sharp fall recently—from 64.1 to 45.5—which generally reflects pessimism among households regarding future economic conditions. This kind of drop would traditionally support USD/MXN strength, but traders have mostly shrugged off the data. That’s because the drop appears already baked into the prevailing risk models, and many participants anticipate that Banxico will respond with more lenient monetary policy. So far, the Peso’s resilience despite internal weakness suggests that external forces—particularly in the US—are holding more sway.
That brings us to the Fed. Over the past several sessions, statements from key officials have leaned towards a more cautious view on rate cuts. Comments on inflation persistence and labour market imbalances make it clear that policymakers are not in a hurry. However, market participants remain sceptical that inflation alone will keep the Fed on hold indefinitely—especially given ongoing concerns over trade frictions and global growth. With the upcoming dialogues between US and Chinese representatives in Switzerland, most appear to be positioning around headline risk rather than mounting heavy directional bets.
As price holds just under the 10-day SMA at 19.59, it would take a convincing hourly close above that level to suggest any substantive recovery in USD/MXN. Otherwise, the bias remains for more softening. From a technical angle, support could emerge nearer 19.36, a zone that aligns with a minor retracement level and recent intraday lows. Should it break, stop losses are likely to accelerate the sell-off, encouraging further Peso strength.
From our vantage, policy divergence between the Fed and Banxico continues to anchor trading strategies in this pair. While the Fed contemplates prolonged tightness, Banxico appears poised to cut in response to subdued local activity. That said, differences in rate direction do not always translate neatly into trending currency pairs when risk sentiment is unstable. Therefore, most of this comes down to timing.
We’re closely observing the Relative Strength Index, which is holding in mid-range territory. This leaves ample space for a fresh selling leg should fundamentals shift or if further disappointing US data hit tape. No immediate signals point to a reversal yet, so the temptation is there to play short positions on rallies—especially near the 19.58–19.63 area, where trendline and moving average resistance converge.
The next few weeks could become more turbulent around scheduled releases and overseas negotiations. While little new was revealed by the recent decline in Mexican consumer confidence, any fresh data or policy surprise from Washington could reignite volatility. We are keeping a measured approach, focusing on price reactions rather than headlines themselves, and respecting support and resistance intervals given the lack of a sustainable trend so far.
