Market Analysis by Antonio Di Giacomo, Financial Markets Analyst for LATAM at XS
May 27, 2025
“On Monday, May 26, the Mexican peso began the trading session with an appreciation against the U.S. dollar, currently trading around 19.20 pesos per dollar. This movement occurred in the context of low trading volume due to the Memorial Day holiday in the United States. Despite the limited market activity, the peso reached a new annual low of 19.18, its lowest level since September 2024.
The peso’s advance is primarily explained by external factors, particularly the announcement by U.S. President Donald Trump, who decided to postpone until July the implementation of a 50% tariff on exports from the European Union. This measure eased global trade tensions and improved market sentiment toward riskier assets, benefiting currencies of emerging markets such as Mexico.
From a technical standpoint, the peso has recorded several consecutive sessions of gains, consolidating an appreciation trend. The exchange rate is projected to continue toward the 19.10 pesos per dollar area, with resistance marked around 19.30. These technical levels become relevant in an environment where traders pay more attention to technical signals without primary macroeconomic data during the U.S. holiday.
Another key factor has been the general weakness of the U.S. dollar globally. The greenback has lost strength against a basket of currencies amid expectations that the Federal Reserve will be more cautious about future interest rate hikes. This perception has encouraged investors to seek returns in other economies, strengthening the peso and other emerging market currencies.
The current environment also reflects a pivotal moment for investment flows into Latin America. Mexico, in particular, has captured the attention of international markets due to its fiscal stability, tight monetary policy, and growing interest in nearshoring. These macroeconomic conditions provide additional support for the peso in the face of global uncertainty.
Despite market optimism, risks that could create exchange rate volatility in the coming days remain. Factors such as the evolution of trade tensions, monetary policy decisions in the United States, and yet-to-be-released economic data could alter the peso’s current trajectory.
In conclusion, the Mexican peso has shown strong performance at the start of the week, supported by external factors such as the pause in the trade war between the U.S. and the European Union and the dollar’s weakness in international markets. While the technical outlook supports a continued appreciation trend, the landscape remains sensitive to global geopolitical and economic developments. Mexico remains an attractive destination for foreign capital, though caution remains necessary given potential shifts in the international financial environment.”