Mexican peso rises to 17.34 per dollar

The peso’s rise came alongside a lower US policy-rate backdrop and a retreat in Treasury yields, with the US 10-year note near 4.62% in forecast terms and the fed funds rate projected around 3.63%. That combination narrows the appeal of the dollar versus higher-yielding currencies such as the peso, especially when carry traders see less urgency to hold US cash.

Oil also provided a tailwind. US crude slipped to about $84.25 a barrel in the latest data after trading above $109 in early May, reducing one source of inflation pressure and supporting risk appetite. For Mexico, a large energy importer in parts of its economy and a market sensitive to global growth sentiment, lower crude can improve the inflation outlook and reinforce expectations that Banxico can keep policy relatively tight without risking a sharper growth slowdown.

Technically, the dollar-peso pair is trending lower. USDMXN closed at 17.34, below its 50-day moving average of 17.41 and comfortably under the 200-day average of 17.67, while RSI readings at 37.8 suggest momentum has cooled without yet signaling an extreme oversold move. The pair’s gradual drift lower has helped keep the Mexican exchange-traded fund EWW supported, with the fund finishing at $77.11 and above both its 50-day and 200-day averages.

For investors, the key question is whether the peso can hold these gains if the Federal Reserve sounds less dovish than markets expect. The next catalyst is the Fed decision and any surprise in US rate guidance, which could quickly reset dollar demand and determine whether the peso’s advance extends or stalls.