Societe Generale analysts, including Kenneth Broux, note that USD/MXN has broken above a multi-month descending trend line and reclaimed its 200-day moving average for the first time since April 2025. They see scope for a broader uptrend if the pair holds above 17.40/17.35, with hurdles at the June peak near 17.68 and projections around 17.80.

Peso under pressure as carry fades

“USD/MXN recently broke above a multi-month descending trend line and has now reclaimed the 200-DMA. The pair has moved above this average for the first time since April 2025, suggesting that upward momentum may be returning.”

“A broader uptrend could gradually develop if it maintains above the 200-DMA (17.40/17.35). The next potential hurdles are located at the June peak near 17.68 and projections around 17.80.”

“In LatAm, we expect Banxico to leave the policy rate unchanged at 6.50% today. Policymakers are likely to retain a data-dependent message, balancing a gradually improving core inflation backdrop and softer growth momentum against a more challenging external environment marked by higher US rates and lingering global uncertainty.”

“Our base case remains that Banxico decouples from the Fed and stays on hold not only today but through the remainder of 2026, allowing the Banxico-Fed policy rate spread, currently around 250bp, to narrow further over time.”

“Speculative investors have remained long MXN for a while now with net long 27.5% of open interest just prior to the Fed/BoJ meetings – that said a sharp surge in USD/MXN break over 200dma to 17.50 is suggestive of potential capitulation of peso longs.”