The Mexican Peso depreciated against the US Dollar on Monday, with the USD/MXN exchange rate climbing back above the 17.00 level to trade at 17.03 after reaching a weekly low of 16.99 earlier in the session [1]. This movement occurred despite recent US economic data that disappointed investors, including a softer-than-expected Consumer Price Index (CPI) for July, which rose 3.4% year-over-year, down from 3.5% in the previous month, and a Producer Price Index (PPI) that slowed from 5.5% to 4.7% [1]. Additionally, US Retail Sales fell from 0.2% to -0.6%, indicating a slowdown in consumer spending [1].
These data points initially pushed the US Dollar Index (DXY) to near two-month lows, with the DXY down 0.05% at 99.59, before the Greenback recovered some ground [1]. The Peso's weakness was attributed in part to heightened uncertainty stemming from the ongoing conflict in the Middle East. US President Donald Trump stated he is not in a hurry to end the war with Iran and clarified that the US would not seek an extension to the 60-day truce outlined in the Memorandum of Understanding, which expires on August 17 [1].
On the domestic front, the Mexican economic calendar was quiet last week, but attention is turning to the upcoming release of the Bank of Mexico's (Banxico) meeting minutes on August 20, which are expected to provide insights into board members' views on the economy and monetary policy [1]. Additionally, traders are awaiting Mexican Retail Sales data for June, scheduled for release on August 21, with expectations of a surge from 1.6% to 3.1% year-over-year, partly due to the World Cup effect [1].
From a technical perspective, USD/MXN remains in a bearish near-term trend, trading at 17.0331 and staying below key resistance levels around 17.37. The Relative Strength Index (RSI) is just under the 30 line, suggesting oversold conditions, but there is no clear sign of a momentum recovery yet. Any upward movement toward 17.37 is likely to be seen as corrective within the broader bearish structure [1].
CONCLUSION
The Mexican Peso's recent weakness against the US Dollar is driven by geopolitical uncertainty and a lack of domestic economic catalysts, despite softer US economic data. Market participants are now focused on upcoming Banxico minutes and Mexican Retail Sales data for further direction. Technical indicators suggest the Peso remains under pressure, with any rallies likely to be limited in the near term.