By Antonio Di Giacomo, Senior Market Analyst at XS.com
The Mexican peso began the November 28 session on a positive note, appreciating slightly against the U.S. dollar amid low liquidity due to the Thanksgiving holiday in the United States. During the early hours of trading, the exchange rate hovered around 18.33 pesos per dollar, representing a 0.11% gain and leaving open the possibility of closing the week with an accumulated appreciation of roughly 1.25%.
This stability contrasts with recent episodes of volatility and provides a reprieve for the local FX market. This performance is supported by growing optimism surrounding the trajectory of U.S. monetary policy. In recent weeks, expectations that the Federal Reserve will deliver a rate cut at its December meeting have increased significantly, driven by
more dovish signals from some central bank members. Markets are currently pricing in about an 83% chance of a 25-basis-point cut, which has partially weakened the
dollar and favored emerging-market currencies such as the peso.
At the domestic level, economic data has also played a key role in strengthening the Mexican currency. The unemployment rate fell to 2.6% in October, its lowest level in several months, reflecting notable resilience in the labor market. Investors have interpreted this indicator as a sign of economic strength that could continue to attract flows into Mexico, especially in sectors tied to nearshoring and U.S. domestic demand.
On the technical front, the USD/MXN pair is testing a critical support zone, making it more sensitive to surprises in data releases or shifts in market sentiment. Analysts
note that if the exchange rate breaks below key levels in the 18.25–18.20 region, additional bearish moves could be triggered, pushing the peso to new short-term
highs. However, a technical rebound is also possible given the dollar’s slight recent recovery.
The international backdrop is mixed. Although the U.S. dollar index has posted a modest increase in response to moderate U.S. economic data, the greenback has
been unable to regain momentum amid widespread expectations of a full rate cut. Easing inflation and signs of economic cooling have pressured markets to anticipate
a more accommodative Fed stance, limiting aggressive upward moves in the dollar.
In this context, emerging markets continue to show relatively solid performance, supported by improved commodity prices and investors’ quest for attractive yields in a global environment of potentially lower rates. Mexico, with a still-restrictive monetary policy and a competitive risk premium, remains a focal point for foreign investors who maintain long positions in the peso.
Finally, the day’s low liquidity, due to the partial closure of U.S. markets, limits visibility into short-term exchange-rate behavior. Nevertheless, macroeconomic fundamentals and monetary-policy expectations continue to tilt the balance in favor of the Mexican currency, at least in the very short term.
In conclusion, the Mexican peso begins the session with moderate gains, supported by expectations of U.S. rate cuts, favorable local economic data, and a global environment that favors emerging-market currencies. Although the exchange rate faces relevant technical levels and volatility risks persist, current factors continue to support the peso, so long as no unexpected economic or geopolitical shocks emerge to alter the outlook.