Peso Faces Key Test Ahead of Banxico Decision

The Mexican peso is consolidating after USD/MXN rebounded from multi-week lows near 18.20. On the daily chart, the pair bounced off the lower Bollinger Band and is now pressing into the 18.40–18.45 zone, which coincides with the upper boundary of the short-term descending channel that has defined September’s selloff.

Technical Levels in Play

• Break above 18.45 → could signal momentum shift, opening room toward 18.65–18.75.

• Support at 18.25–18.20 → failure here risks renewed downside, exposing 18.10 and the psychological 18.00.
  
  The broader bias remains tilted bearish unless buyers can force a clean breakout.

Banxico in Focus

All 24 analysts surveyed by Reuters expect Banxico to cut rates by 25 bps to 7.50%. While headline inflation has eased, sticky core CPI in August limits space for more aggressive easing. The tone of the central bank’s forward guidance will be critical in shaping peso sentiment.

Trade Policy Wildcard

Mexico’s Economy Ministry confirmed plans to lift tariffs on imported vehicles and auto parts, raising duties on Asian cars — particularly from China — from 20% to 50%. These protectionist steps mirror policies once seen under the Trump administration and could cloud Mexico’s trade outlook, adding volatility for peso traders.

Outlook

With technicals tightening around 18.25–18.45 and Banxico’s decision looming, the peso’s resilience is about to be tested. The combination of monetary policy tone and tariff headlines may provide the catalyst for either a decisive breakout or a renewed slide.