The Mexican Peso depreciated by approximately 0.16% against the US Dollar on Tuesday, with the USD/MXN pair trading at 17.06 after rebounding from daily lows of 17.02 [1]. This movement was largely attributed to heightened tensions in the Middle East, specifically the unresolved US-Iran conflict, and investor anticipation ahead of the Federal Reserve’s meeting minutes release [1]. CNN, citing a US official, reported that President Trump instructed top administration envoys to halt conversations with Iran, and confirmed that the US Navy blockade remains in effect [1].
US economic data released on the same day was mixed, with July Housing Starts declining 12.4% month-over-month from 1.415 million in June to 1.239 million, and Industrial Production also falling short of estimates and the previous month's reading. However, these figures were largely overshadowed by geopolitical developments [1]. The US Dollar Index (DXY) rose by about 0.07%, reaching 99.65, reflecting a modest strengthening of the Greenback against a basket of six currencies [1].
In Mexico, the economic calendar was quiet, but traders are closely watching the upcoming Bank of Mexico (Banxico) meeting minutes scheduled for Thursday and Retail Sales data on Friday, August 21 [1]. Janeth Quiroz, Director of Economic Analysis at Monex, noted that the Peso is also affected by uncertainty surrounding the revision of the USMCA trade agreement, adding another layer of risk for the currency [1].
From a technical perspective, USD/MXN remains below a cluster of longer-term simple moving averages (SMA) at 17.3607, indicating a bearish near-term bias. The Relative Strength Index (RSI) has lifted to 33.19 from oversold territory, suggesting that selling pressure may be moderating but not reversing. Resistance is seen at the SMA cluster near 17.36, reinforced by descending trend-lines, and as long as USD/MXN stays below these levels, downside risk persists [1].
CONCLUSION
The Mexican Peso’s recent weakness is driven by geopolitical tensions and anticipation of key US and Mexican central bank releases. Technical indicators suggest continued downside risk for USD/MXN unless resistance levels are breached. Market participants remain cautious, awaiting further clarity from upcoming Banxico minutes and US economic developments.