--- title: "USD/MXN Forecast: Mexican peso shows signs of weakness ahead of the Fed decision" type: "News" locale: "en" url: "https://longbridge.com/en/news/284422032.md" description: "The Mexican peso is showing signs of weakness against the US dollar, with the USD/MXN pair gaining over 0.3%. This is influenced by market expectations regarding monetary policy in both Mexico and the US. Banco de México has begun a rate-cutting cycle, while the Federal Reserve is expected to maintain stable rates. The interest rate differential may shift, potentially reducing demand for peso-denominated assets. Technical indicators suggest a possible shift towards a bullish bias for USD/MXN, with key resistance at 18.07 and support at 17.10." datetime: "2026-04-28T16:15:40.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/284422032.md) - [en](https://longbridge.com/en/news/284422032.md) - [zh-HK](https://longbridge.com/zh-HK/news/284422032.md) --- # USD/MXN Forecast: Mexican peso shows signs of weakness ahead of the Fed decision The Mexican peso has started the week showing moderate weakness, reflected in recent USD/MXN price action, where the pair has posted a gain of more than 0.3% over the last two sessions in favor of the US dollar. For now, the **buying pressure** that has begun to emerge is mainly driven by market expectations surrounding monetary policy decisions in both Mexico and the United States. These events have introduced a degree of uncertainty, limiting the peso’s ability to strengthen consistently. In this context, if the Federal Reserve maintains a more restrictive tone or reinforces expectations of rate stability, this could continue to support the dollar and, in turn, intensify the **upside pressure on USD/MXN** in the coming sessions. ## **Central bank dynamics** On Mexico’s side, it is important to highlight that headline inflation for the first half of April came in at 4.53% year-over-year, showing a slight slowdown compared to the 4.55% recorded in March and in line with market expectations. While this does not represent a structural decline in inflation, it does suggest a **stabilization in price dynamics**, reducing the urgency to maintain a highly restrictive monetary policy stance. In fact, Banco de México has already begun a rate-cutting cycle, lowering rates from 7.00% to 6.75% in its latest decision. For the upcoming May 7 meeting, the base case points to a pause, although another cut toward the 6.50% level cannot be ruled out if inflation continues to stabilize. This suggests that, rather than maintaining an aggressive stance, the central bank could shift toward a **more flexible monetary policy** in the coming months. On the US side, the picture is different. The market has started to consolidate expectations of **prolonged rate stability**. For the next decision (april 29), probabilities point almost entirely to the Federal Reserve keeping rates unchanged at 3.75%. More importantly, market projections suggest that this dynamic could extend well into 2027, with meaningful probabilities of no changes in the coming quarters. _Source: CMEGROUP_ This reinforces the view that US monetary policy will remain restrictive for longer, limiting the scope for a sustained dollar depreciation in the short term. At this point, the **interest rate differential** once again becomes a key factor. For much of 2025, this differential favored the Mexican peso, as it offered a higher relative yield. However, this dynamic may begin to shift for two main reasons: First, if the Federal Reserve maintains a firm stance, the dollar could regain attractiveness, supported by expectations of stable rates in the coming months, which could renew interest in USD-denominated assets. Second, if Banco de México continues to cut rates, the differential will narrow, potentially reducing the attractiveness of peso-denominated investments. In both cases, the outcome could be a **decline in demand for peso-denominated assets**, opening the door for further dollar strength and more consistent upside pressure in USD/MXN. ## **Technical outlook for USD/MXN** _Source: StoneX, Tradingview_ - **Major bearish channel under pressure:** Although USD/MXN has maintained a bearish structure for several months, the recent price recovery has brought it closer to the upper boundary of the channel. This is a key area, as a sustained move higher could trigger a breakout that challenges the dominant bearish structure and opens the door to a **shift toward a bullish bias** in the short term. - **RSI:** The RSI indicator remains slightly below the 50 level but has begun to show a **consistent upward slope**, suggesting that selling pressure is losing momentum in the short term. If this trend continues, the indicator could move into positive territory, reinforcing the case for a shift toward stronger buying momentum. - **MACD:** The MACD supports this view, as the histogram has shown a steady recovery and is now close to the zero line. A move into positive territory would indicate a **shift in market momentum**, supporting a stronger bullish bias in short-term moving averages. **Key levels:** - **18.07 – Key resistance:** A zone of recent highs aligned with the 200-period moving average and the 23.6% Fibonacci retracement level. This represents the most important resistance in the short term. A sustained break above it could confirm a structural shift and open the door to a more defined uptrend in the coming weeks. - **17.56 – Current barrier:** A level aligned with the descending trendline and the 50-period moving average. This is a critical area, as a clear break could invalidate the bearish structure and reinforce **more consistent buying pressure** in the short term. - **17.10 – Key support:** A zone of 2026 lows. A move back toward this level could restore bearish momentum and confirm the continuation of the descending channel, keeping the broader downtrend intact in the coming sessions. **Written by Julian Pineda, CFA, CMT – Market Analyst** **Follow him on:** **@julianpineda25** ### Related Stocks - [USDU.US](https://longbridge.com/en/quote/USDU.US.md) - [UUP.US](https://longbridge.com/en/quote/UUP.US.md) - [MEXX.US](https://longbridge.com/en/quote/MEXX.US.md) - [CME.US](https://longbridge.com/en/quote/CME.US.md) - [SNEX.US](https://longbridge.com/en/quote/SNEX.US.md) ## Related News & Research - [Warsh's Fed stance stirs global stability fears amid inflation surge](https://longbridge.com/en/news/286988187.md) - [Indonesia central bank delivers hefty interest rate rise as it looks to stem battered rupiah's fall](https://longbridge.com/en/news/287025507.md) - [An overlooked lesson from Jay Powell’s Fed](https://longbridge.com/en/news/286643741.md) - [Bond yields surge as markets brace for prolonged high rates](https://longbridge.com/en/news/286668120.md) - [May 2026 savings choice: CDs lock rates, HYSAs offer access](https://longbridge.com/en/news/286628983.md)