Mexican Peso Rises as U.S. Inflation Falls Short of Expectations
The exchange rate declined for the second consecutive day following lower-than-expected U.S. inflation data and amid the implementation of Donald Trump’s tariffs on aluminum and steel.
The Mexican peso appreciated against the U.S. dollar in Wednesday’s trading session, marking its second day of gains. The local currency strengthened after weaker-than-expected U.S. inflation figures and in the context of new tariffs on aluminum and steel.
The exchange rate closed at 20.1797 pesos per dollar, down from 20.2582 pesos the previous day, according to official data from the Bank of Mexico (Banxico). This represented a gain of 7.85 cents, or 0.39%, for the peso.
The dollar fluctuated between a high of 20.3079 and a low of 20.1972 pesos. Meanwhile, the U.S. Dollar Index (DXY) from the Intercontinental Exchange, which measures the greenback against a basket of six major currencies, rose 0.16% to 103.57 points.
Inflation and the Fed
The U.S. Consumer Price Index (CPI) rose slightly by 0.2% in February on a monthly basis, below the consensus estimate of 0.3%. This brought the annual inflation rate to 2.8%, also lower than the expected 2.9%.
The peso extended its weekly appreciation as inflation figures fueled expectations of a Federal Reserve (Fed) rate cut. However, Fed Chair Jerome Powell recently stated that the central bank is in no rush to resume rate cuts and that more time is needed to assess the impact of President Donald Trump’s new trade policies on prices.
Trump’s Tariffs
On the trade front, the peso’s gains occurred as the U.S. implemented 25% tariffs on steel and aluminum. These tariffs prompted responses from the European Union and Canada, heightening caution in the markets.
Meanwhile, Mexico’s President Claudia Sheinbaum stated that her administration will wait until April 2 to decide whether to impose reciprocal tariffs on U.S. steel and aluminum, reinforcing her conciliatory stance toward Trump’s government.
From a technical perspective, the exchange rate is at the first support level of the broad 20.20–20.75 range. This suggests the potential for medium-term long positions; however, in the short term, a further decline toward 20.10–20.15 is possible.
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