Mexican Peso advances within range against the US Dollar

• USD/MXN falls below 17.50 for a third consecutive session as the Mexican Peso maintains its recent strength.
• Softer US consumer confidence and slowing private-sector hiring limit demand for the US Dollar ahead of the Fed decision.
• Mexico’s economy is expected to expand by 1.3% in the second quarter with annual growth forecast to accelerate to 1.5%.

USD/MXN trades around 17.40 on Tuesday, posting modest losses for a third consecutive session. The US Dollar (USD) retains a broadly firm tone despite softer-than-expected United States (US) data, as investors await the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.

The Greenback came under some pressure after the Conference Board Consumer Confidence Index declined to 90.8 in July from an upwardly revised 92.2 in June. Meanwhile, US private employers added an average of 15K jobs per week during the four weeks ending July 11, according to the NER Pulse report, indicating that hiring momentum slowed for a fifth consecutive week.

The Mexican Peso (MXN), by contrast, benefits from the latest US tariff announcement. Washington imposed a 10% tariff on Mexican imports not covered by the United States-Mexico-Canada Agreement (USMCA), below the 12.5% rate applied to economies without a trade agreement. The comparatively lower levy helps preserve Mexico’s competitive advantage in the US market.

The Fed is widely expected to leave interest rates unchanged on Wednesday, placing the focus on its policy statement and guidance regarding future adjustments. Investors will assess whether officials remain concerned about persistent inflation or place greater emphasis on signs of weakening employment and consumer confidence.

Attention now turns to Mexico’s preliminary second-quarter Gross Domestic Product figures on Thursday. The economy is expected to have expanded by 1.3% during the quarter, recovering from the 0.6% contraction recorded in the first quarter. Annual growth is forecast at 1.5%, accelerating from the previous 0.2%.

Short-term technical analysis:

On the 4-hour chart, USD/MXN trades at 17.4349, retaining a modest bearish bias as the pair holds beneath a dense band of nearby resistance. Price remains capped below the 100-period Simple Moving Average (SMA) at 17.4657 and the 20-period SMA at 17.4722, suggesting rallies are being sold, while the Relative Strength Index (RSI) at 45.1 leans slightly bearish but stops short of oversold conditions, hinting at subdued downside momentum rather than an aggressive sell-off.

On the topside, initial resistance is aligned with the horizontal level at 17.4399, followed by 17.4584. Above these, the 100-period SMA at 17.4657 and the 20-period SMA at 17.4722 form a critical supply cluster, with further barriers at 17.4837 and 17.4928 that would need to give way to ease the current bearish tone. The 17.38 area, which marked the July 22 low, could act as an initial support level if USD/MXN extends its decline.expose USD/MXN to additional downside discovery until a new floor develops on the chart.

(The technical analysis of this story was written with the help of an AI tool. Know more.)