The USD/MXN exchange rate has crashed in the past few months as concerns about the ongoing trade war eased. After peaking at 21.3 in February, the pair has retreated to 19.38, its lowest level since October 15 last year. It has fallen by almost 9% as focus now shifts to key central bank statements.
Jerome Powell statement and US retail sales data
The USD/MXN pair retreated this week after the US published encouraging consumer inflation data. According to the Bureau of Labor Statistics (BLS), the headline consumer price index (CPI) dropped from 2.4% in March to 2.3% in April. The core CPI figure remained unchanged at 2.8%.
These inflation numbers had a minimal impact on the market because the data was collected shortly after Donald Trump launched his tariffs on ‘Liberation Day’. As such, analysts believe that inflation will bounce back later this year as companies adjust their prices.
The next important USD/MXN news will be the upcoming US retail sales, industrial and manufacturing production, and jobless claims numbers.
Consumer spending, which constitutes the largest portion of the Gross Domestic Product (GDP), is gauged by retail sales figures, making them significant economic indicators.
Data compiled by Investing shows that analysts expect the retail sales figure to be 0.0%, down from 1.4% in the previous month. Core sales are also expected to come in at 0.3%, down from 0.5% in March.
The other top US dollar catalyst will be a statement by Jerome Powell, the head of the Federal Reserve. This will be his first statement since the bank delivered its interest rate decision last week.
As was widely expected, the Fed left interest rates unchanged at 4.50% and hinted that it will maintain a wait-and-see approach. The bank is assessing the impact of Trump’s tariffs on the economy and whether they will lead to higher prices.
Powell will also likely comment on the recent truce between the US, UK, and China, and whether it will impact inflation.
Mexico interest rate decision
The other important USD/MXN news will come from Mexico, where the central bank will deliver its interest rate decision.
Economists expect the bank to continue a trend that started in 2024 when it initiated its interest rate cuts. It has slashed rates in the last six consecutive meetings, bringing them from 11% in June to 9% today. It will deliver a 0.25% cut to 8.25% today.
Banxico is slashing rates to stimulate the economy at a time when trade tensions with the US have risen. The US still maintains its fentanyl-related tariffs on Mexico and Canada, and has not hinted when they will end.
By cutting rates again, Banxico will be sending a message that it is prioritizing economic growth instead of inflation. Recent data show that inflation has continued rising, moving to 3.93% in April from 3.59% a few months ago.
USD/MXN technical analysis
The daily chart shows that the USD to MXN exchange rate has been in a strong downtrend in the past few months. It has moved from a high of 21.3 in 2025 to 19.40, the lowest swing since October 14.
The pair has formed a rounded top pattern and has moved to the 38.2% Fibonacci Retracement point. It has moved below the 50-day and 200-day Exponential Moving Averages (EMA).
The Relative Strength Index (RSI) has moved below 40. It also remains below the zero line. Therefore, the pair will likely continue falling as sellers target the 50% retracement point at 18.78, down by 3.12% from the current level.
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