USD/MXN Forecast: Peso Under Pressure as Banxico Decision Approaches
Author: Julian Pineda, CFA, CMT
Date: February 4, 2026
Market Overview
The USD/MXN currency pair is poised to close the trading session with gains exceeding 0.85% in favor of the U.S. dollar. This movement comes as market participants await the upcoming monetary policy decision from the Banco de México (Banxico), scheduled for February 5, 2026.
Banxico's Upcoming Decision
Market consensus anticipates a 25-basis-point rate cut from Banxico, which would reduce the benchmark interest rate from 7.00% to 6.75%. This expectation is bolstered by a recent decline in inflation, which fell to 3.69% in December 2025 from 3.8% in November. The easing of inflation suggests that a more restrictive monetary policy is not warranted at this time, allowing for a gradual easing cycle to continue.
Impact of Interest Rate Differential
The Mexican peso's earlier strength against the dollar was largely attributed to the significant interest rate differential between Mexico and the U.S. However, if Banxico implements the anticipated rate cut, this differential will narrow, potentially diminishing the appeal of Mexican fixed-income assets. Conversely, a stable U.S. Federal Reserve could enhance the attractiveness of U.S. bonds, further supporting the dollar.
Strength of the U.S. Dollar
The recent strength of the U.S. dollar, as indicated by the DXY index, remains a critical factor influencing the USD/MXN pair. The index has shown a consistent upward trend, trading above the 97 level and approaching the psychological 100 mark, which reflects renewed confidence in the U.S. currency.
Technical Outlook for USD/MXN
Key Levels:
- 17.89: Key resistance level aligned with the 50-period simple moving average. A break above this could trigger significant upside pressure.
- 17.50: Current barrier and near-term resistance zone, serving as a reference during short-term corrections.
- 17.11: Key support level not seen since April 2024. A move towards this level could indicate a more aggressive bearish trend.
Despite the recent rebound in USD/MXN, the overall bearish channel remains intact. The RSI indicates that selling momentum is still relevant, while the MACD shows potential for a shift towards stronger buying momentum, pending more decisive price action.
Conclusion
As the Banxico decision approaches, the outlook for the Mexican peso remains cautious, with potential for further pressure from the U.S. dollar. Market participants will be closely monitoring the interest rate decision and its implications for the USD/MXN pair in the coming sessions.