Mexican Peso stumbles as traders brace for US inflation week

The Mexican Peso loses some ground versus its North American counterpart, the US Dollar, as the USD/MXN rises over 0.25% at 16.93, even though the Greenback edges lower against a basket of six currencies, the so-called US Dollar Index.

USD/MXN slips despite softer Dollar as Fed hike bets linger

Thin liquidity conditions as the financial markets remained closed in the US, in observance of Labour Day. In the meantime, an escalation of the Middle East conflict, with the US retaliating against Tehran’s attack on Oil vessels, pushed Oil prices higher, to the detriment of the US Dollar.

In the meantime, inflation expectations in the US continued to rise, forcing investors to price in a nearly 61% chance of a 25-basis-point rate hike by the Federal Reserve at the September 15-16 meeting.

Last week’s stronger-than-expected Nonfarm Payrolls report for August confirmed Fed Chair Kevin Warsh’s saying that the jobs market is “consistent with full employment.”

Although the data was positive and the US Dollar strengthened after NFP, the move faded as investors await US inflation data on the producer and consumer sides on Thursday and Friday, respectively.

In Mexico, private economists expect interest rates to remain unchanged for the foreseeable future, meaning that for the rest of 2026 and throughout 2027, Mexico’s main reference rate will be 6.50%. Regarding the exchange rate, analysts expect the Mexican Peso to depreciate to 17.50 by the end of 2026 and to 18.07 by the end of 2027.

Data-wise, Mexico’s schedule will feature 12-month inflation for August, expected at 3.3%, up from 3.12% on September 9. For September 11, Industrial Output for July is forecast at 0.1% MoM, down from 0.2%, and for the same period on an annual basis is projected to rise from 1.7% to 1.8%.

USD/MXN Price Forecast: Technical outlook

In the daily chart, USD/MXN trades at 16.9293, keeping a bearish near-term tone as the pair holds below the clustered 50-, 100- and 200-day simple moving averages (SMAs) around 17.2401 and beneath the active descending trend lines, the nearest of which is capping price near 17.0838. The Relative Strength Index (14) hovers at 36.5, staying in weak territory and hinting that downside pressure persists, even if the latest slide is showing signs of moderation.

On the topside, initial resistance emerges at the nearby descending trend cap around 17.08, ahead of the broader SMA cluster close to 17.24, while the longer-term downtrend barrier tied to prior highs sits much higher near 18.12. On the downside, the immediate level to watch is the horizontal support drawn at 16.89, where a clear break lower would expose further weakness toward fresh lows, whereas holding above this floor could encourage a short-term consolidation within the broader bearish structure.