MarketPulse Summary: USD/MXN Outlook Amid Cartel Violence
By Elior Manier | 24 February 2026
Overview
The USD/MXN currency pair, typically less favored in retail trading, is gaining attention due to escalating violence in Mexico. This unrest follows the assassination of Nemesio "El Mencho" Oseguera Cervantes, the leader of the Jalisco New Generation Cartel (CJNG), by Mexican Special Forces with U.S. intelligence support. The aftermath has seen retaliatory actions from the cartel, including blockades and arson in key areas like Guadalajara and Puerto Vallarta.
Current Situation
As violence surges, concerns grow regarding the Mexican government's ability to ensure security, especially with the 2026 FIFA World Cup approaching. President Claudia Sheinbaum has downplayed risks to infrastructure and tourism, but the situation remains volatile and requires careful monitoring.
Market Analysis
The USD/MXN has been in a significant downtrend since early 2025, dropping nearly 17%. The pair is currently testing support levels between 16.75 and 17.10. Despite a hawkish pause from the Banco de México (Banxico), which has kept interest rates at 7.00%, the political instability may overshadow these monetary policy signals.
Technical Analysis
Weekly Chart Insights
The weekly chart indicates a potential bullish divergence forming, suggesting a possible reversal. The pair remains within a downward channel, with critical support levels being tested.
Daily Chart Observations
On the daily chart, the USD/MXN is at the bottom of its descending channel, showing signs of a base formation. Key resistance levels are identified between 17.25 and 18.30, while immediate support is noted at 17.10 to 17.18.
Trading Strategy
The immediate trading range is between 17.10 and 17.30. A rejection of support and a move above the 4-hour 50-period moving average could signal a reversal. Traders should watch for a close above 17.30 to confirm bullish momentum, while a break below 17.09 would maintain the downtrend.
Conclusion
As the situation in Mexico evolves, traders are advised to remain vigilant and informed. The interplay between political instability and market dynamics will be crucial in shaping the USD/MXN outlook. Continuous monitoring of both local developments and broader economic indicators is essential for making informed trading decisions.