The Mexican peso continued its upward momentum, marking a 10-day rally and gaining over 0.12% on Thursday after the Bank of Mexico (Banxico) decided to keep its benchmark interest rate unchanged at 6.50% for the second consecutive meeting. At the time of reporting, the USD/MXN pair traded at 17.21, having reached a daily high of 17.26 earlier in the session [1].
Banxico's unanimous decision to hold rates follows the conclusion of its easing cycle on May 7. In its monetary policy statement, the central bank noted that both headline and core inflation are expected to decline throughout the forecast horizon, but at a more gradual pace than previously anticipated. The bank projects that headline and core inflation will reach its 3% target in the fourth quarter of 2027, with expectations for both measures to end 2026 at 3.5% [1]. Banxico also highlighted that economic slack is likely to persist and that there are substantial downward risks to economic activity [1].
On the technical front, the USD/MXN daily chart shows the pair trading below clustered simple moving averages, with the latest triple SMA reading at 17.4104 acting as nearby resistance. The Relative Strength Index (RSI) at 36.18 suggests that selling pressure remains dominant but is becoming stretched, indicating the potential for a near-term reversal if oversold conditions persist [1].
In the broader context, positive US jobs data was reported, with initial jobless claims for the week ending August 1 at 199,000—higher than the previous week but below estimates of 202,000. Planned layoffs in July dropped 27% to 33,429, the lowest level in two years, according to the US Challenger Job Cuts report. St. Louis Fed President Alberto Musalem maintained a hawkish stance, emphasizing that inflation remains well above the 2% target and that monetary policy must continue to restrain underlying inflation. Money markets are currently pricing in a 58% chance of a 25 basis point rate hike by the Federal Reserve at its September 16 meeting [1].
Looking ahead, the US economic calendar features July’s Nonfarm Payrolls, projected to improve from 57,000 to 80,000, with the unemployment rate expected to remain steady [1].
CONCLUSION
The Mexican peso's rally has been reinforced by Banxico's decision to hold rates steady and its cautious outlook on inflation and economic growth. Technical indicators suggest the USD/MXN pair remains under selling pressure, while upcoming US economic data and Federal Reserve policy decisions may influence future market direction.