USD/MXN Forecast: The Mexican Peso Regains Strength
Author: Julian Pineda, CFA, CMT
Date: February 24, 2026
Market Overview
During the trading session, the USD/MXN currency pair has experienced a decline of approximately -0.5%, indicating a strengthening of the Mexican peso. This shift is primarily attributed to the recent release of inflation data, which suggests a potential shift towards a more hawkish stance from Mexico's central bank, Banco de México (Banxico).
Inflation Data Insights
According to the National Institute of Statistics and Geography (INEGI), annual inflation in Mexico reached about 3.9% in the first half of February, marking three consecutive biweekly increases and the highest level since November 2025. Core inflation, which excludes volatile items, was reported at 4.52% annually, significantly above Banxico's target of 3% with a permissible variation of one percentage point.
Given these inflation trends, Banxico's decision to maintain the benchmark interest rate at 7.00% may be reconsidered, especially if inflation pressures persist. This could lead to a firmer monetary policy stance, potentially supporting the peso further against the US dollar.
Interest Rate Differential
The current interest rate differential between Banxico's rate (7.00%) and the US Federal Reserve's rate (3.75%) stands at 3.25%. If Banxico opts for a less accommodative policy while the Fed maintains its rates, this differential could enhance the attractiveness of peso-denominated assets, particularly in the fixed-income market.
Potential Risks from Tariffs
Recent announcements regarding potential 15% global tariffs by the Trump administration have raised concerns about renewed trade tensions. Given that over 80% of Mexico's exports are directed to the United States, any concrete measures could undermine confidence in Mexico's trade dynamics, potentially leading to a depreciation of the peso.
Technical Outlook for USD/MXN
Key Levels:
17.86: Main resistance level aligned with the long-term bearish trendline.
17.50: Current barrier aligned with the 50-period moving average, indicating a neutral market phase.
17.11: Relevant support level not seen since April 2024; a break below this could intensify bearish trends.
The long-term bearish channel remains intact, with recent price action indicating a phase of neutrality. The Relative Strength Index (RSI) remains below 50, suggesting continued downward pressure, while the Average Directional Index (ADX) indicates a loss of directional strength.
Conclusion
The Mexican peso's recent strength is supported by inflation data that may prompt a more hawkish monetary policy from Banxico. However, potential trade risks from tariff announcements could pose challenges ahead. Traders should monitor key technical levels and the evolving economic landscape for further insights into the USD/MXN pair.