Dollar projections against the Mexican peso: comprehensive analysis for 2025

The USD/MXN exchange rate continues to be one of the most followed currency pairs by investors in Latin America. This parity reflects the economic connection between the United States and Mexico, but its behavior is influenced by macroeconomic, political, and monetary factors that generate significant movements. As we approach 2025, understanding what determines the behavior of this pair is essential for making informed decisions.

Current context of the currency pair

USD/MXN has shown notable appreciation in recent weeks, fluctuating around 19.88-19.94 pesos per dollar. This movement responds to multiple simultaneous factors: from uncertainty generated by electoral processes to changes in monetary policies of both nations.

In the United States, markets closely monitored the presidential campaign, generating volatility in search of safe-haven assets. Meanwhile, in Mexico, the implementation of structural reforms has increased uncertainty about institutional stability, putting downward pressure on the Mexican peso.

Technical characteristics of the USD/MXN pair

Technical indicators: short-term signals

Analysis using technical tools provides clues about the imminent behavior of the pair. Bollinger Bands, configured with a 20-period moving average, show moderate volatility with the price recently touching the upper band. This behavior suggests bullish momentum, although a pullback toward the moving average could indicate a consolidation phase in the coming days.

The Relative Strength Index (RSI) stands at 53.42, reflecting a neutral condition with no clear overbought or oversold signals. This technical balance implies that the pair could oscillate within a defined range, without a predominant short-term direction.

Meanwhile, the Relative Volatility Index (RVI) marks 34.60, indicating a slight bearish bias. This indicator suggests that the current momentum has a negative inclination, reinforcing the possibility of corrections if the pair does not hold its current supports.

Fundamental analysis: the medium-term compass

Divergence in economic growth

Economic prospects between the two nations diverge significantly. Mexico faces moderate growth, with IMF forecasts at 1.3% for 2025 and BBVA Research at 1.0%, reflecting weakness in domestic demand and contraction in formal employment generation.

In contrast, the United States maintains a more robust trajectory. Projections point to GDP growth near 2.1%, supported by resilient consumption and a dynamic labor market. This economic gap typically strengthens the dollar, as it attracts international capital into perceived safer US assets.

Monetary policy: decisive factor

Banxico has initiated a cycle of rate cuts, lowering from 10.50% in September 2024. Further reductions are anticipated during 2025, a move that historically weakens emerging market currencies, including the Mexican peso.

The US Federal Reserve has also begun its easing cycle, with 50 basis point cuts in September. However, the pace of these adjustments is expected to be more gradual, maintaining competitive rates that continue to attract investment into dollar-denominated instruments.

Inflation and its lasting impact

Inflation in Mexico is estimated at 3.7% to 3.9% by the end of 2024, above the central bank’s 3% target. This persistent inflationary pressure weakens the peso, prompting investors to seek alternatives with higher purchasing power, such as the US dollar.

Dollar projections for 2025

Consulted analysts offer varied scenarios for the dollar forecast against the Mexican peso throughout 2025:

The dispersion in these estimates reflects the inherent uncertainty of the macroeconomic environment. While some analysts project accelerated depreciation of the peso, others anticipate some stabilization toward the end of the year. This variability underscores the importance of staying alert to political and economic developments.

Structural factors shaping the pair

Interest rate differential

The positive differential between US and Mexican rates creates a favorable environment for dollar strengthening. Investors seek higher yields in dollar-denominated assets, exerting selling pressure on the peso.

Mexico’s dependence on energy exports

Fluctuations in oil prices directly impact Mexico’s export capacity. Falling crude prices reduce foreign exchange income, weakening the national currency. Conversely, high prices generate demand for pesos for commercial transactions.

Political stability and institutional confidence

Political events in both nations influence investors’ risk perception. Controversial reforms or electoral uncertainty tend to depress appetite for assets from emerging countries, benefiting the dollar as a safe-haven currency.

Operational strategies for investors

Entry signals (buy operations)

A sustained break above the 20.00 pesos per dollar level, accompanied by an RSI that does not show extreme overbought conditions, would suggest solid bullish momentum. This scenario would be particularly likely if Banxico continues its rate cut cycle, further widening the yield differential.

Exit signals (sell operations or closing)

If the RSI exceeds 70 points, indicating overbought conditions, traders should consider taking profits or adjusting positions. Similarly, a fall below the support at 19.50, validated by weakness in the RVI indicator, would present opportunities for short positions or closing long positions.

Available investment avenues

Those interested in participating in USD/MXN movements have multiple instruments:

Foreign exchange market (Forex): Direct buying and selling of the pair through authorized platforms, offering greater flexibility and leverage.

Specialized funds: Professionally managed investment vehicles that replicate the pair’s behavior, such as the S&P/BMV index.

Derivatives: Futures and options contracts that allow speculation on future movements without owning the underlying asset.

Contracts for difference (CFD): Agreements that capture price changes without physical possession, accessible through regulated platforms, offering operational flexibility but requiring careful risk management.

Key moments to monitor

The economic calendar includes dates that typically generate movements in USD/MXN. Federal Reserve statements, US employment reports, Banxico decisions, and OPEC announcements on oil production are high-impact events.

Additionally, elections and political changes act as catalysts that can generate significant volatility, offering tactical trading opportunities.

Overall outlook and recommendations

The USD/MXN pair is positioned as a particularly dynamic trading instrument, combining macroeconomic, monetary, and political factors that generate consistent volatility. For 2025, the dollar forecast suggests relative strength driven by rate differentials, comparative economic growth, and demand for safe assets.

Short-term traders can capitalize on frequent fluctuations but should implement rigorous risk management strategies, especially if using leverage. Long positions seem favored in the current context, although constant monitoring of technical indicators will be essential.

In the long run, prudent investors should monitor Mexico’s inflation trajectory, the convergence of rates between both nations, and political stability in Mexico. Sustained improvement in these areas could reverse peso pressures, while deteriorations would amplify the exchange rate gap.