I have been observing the USD/MXN dynamics over the past few years, and honestly, the behavior of this pair has been fascinating. The dollar has shown remarkable strength against the Mexican peso, and there are very concrete reasons behind this that are worth understanding.

The question many ask is how much the dollar will rise against the peso in the coming months. Well, the answer depends on several factors that are at play simultaneously. The first thing to consider is the growth gap between the two countries. The United States maintains a more robust growth, around 2%, while Mexico barely reaches 1%. This difference is crucial because investors seek refuge in stronger economies, which naturally strengthens the dollar.

Now, monetary policy is another key player in this equation. Banxico has been cutting interest rates, which typically weakens the local currency. When yields in pesos are less attractive, capital flows into dollar-denominated assets. It’s a predictable market movement. Additionally, inflation in Mexico remains a problem, staying above the 3% target, which puts further pressure on the peso.

From a technical standpoint, the pair has been fluctuating around 19.88 pesos per dollar. Bollinger Bands show moderate volatility, and the RSI is in neutral territory, suggesting that we could see sideways movements in the short term. But here’s the interesting part: if the pair manages to sustainably break the 20 resistance, we would be looking at a fairly clear bullish scenario.

Political stability also matters. The uncertainty in Mexico, combined with changes in U.S. trade policy, has led investors to prefer dollar-denominated assets. It’s logical: when in doubt, people seek safety.

If you are a trader, there are specific moments to act. Federal Reserve announcements, key economic reports, and political events generate volatility spikes that can be exploited. CFDs are a useful tool to speculate on these movements but require discipline in risk management, especially with leverage.

Looking ahead, the peso will probably remain under pressure as long as the rate gap and political uncertainty persist. The dollar has tailwinds in the short term. However, in the long run, factors like oil prices and institutional stability in Mexico will be decisive. Oil prices are especially important because Mexico heavily depends on oil exports.

For those looking to position themselves in this market, it’s advisable to stay attentive to Banxico and Federal Reserve statements. These monetary policy moves are what really move the needle. If Banxico continues cutting rates more aggressively than the Fed, the dollar could continue appreciating. But if positive surprises occur in the Mexican economy or unexpected geopolitical changes happen, things could move quickly in the opposite direction.