I have been analyzing the behavior of USD/MXN over the past few months, and there are some interesting patterns worth reviewing to understand when the dollar will rise against the Mexican peso in the coming years.

The first thing that catches my attention is that this pair has been quite volatile. We have seen significant fluctuations driven by factors beyond economics: from U.S. presidential elections to judicial reforms in Mexico. The dollar has shown a clear upward trend, reaching levels close to 20 pesos, reflecting a combination of political uncertainty and differences in monetary policies between the two countries.

On the U.S. side, projected economic growth was more robust than Mexico’s. While the United States could grow around 2.1%, Mexico barely reached 1.3% according to IMF forecasts. This is key to understanding why the dollar tends to strengthen: investors seek refuge in safer assets during economic uncertainty. The Federal Reserve has also maintained higher interest rates than Banxico, making dollar-denominated assets more attractive. This is fundamental to explaining when the dollar rises more intensely.

Monetary policy has played a crucial role. Banxico started rate cuts from levels of 10.50%, which typically weakens the local currency. Meanwhile, the Fed also began to reduce rates but more gradually, maintaining the dollar’s advantage. When these differences in rate policies exist, the dollar tends to gain ground.

There’s another factor I cannot ignore: political stability. Uncertainty in Mexico, especially after certain political events, has exerted pressure on the peso. Meanwhile, the strength of the dollar as a global reserve currency keeps it as the preferred safe-haven asset. This largely explains why the dollar will continue to be strong.

Looking at technical indicators, the pair has shown moderate volatility. Bollinger bands suggested it could oscillate within defined ranges, though with potential to break upward. The RSI was in neutral territory, indicating no extreme overbought or oversold conditions. The RVI, which measures trend momentum, showed a slight short-term bearish bias.

Analysts offered varied perspectives. Some projected that USD/MXN could reach 23 pesos by mid-year, while others were more conservative and expected consolidation around 19-20 pesos. This forecast dispersion reflects the market’s inherent uncertainty.

Historically, USD/MXN has been sensitive to external events. Debt crises, changes in oil prices, OPEC decisions, and geopolitical events have left their mark. Mexico, being a net oil exporter, suffers more when prices fall. The United States, as a net importer, benefits from lower prices.

For those looking to position themselves in this pair, it’s important to understand that liquidity is high, especially during New York and London sessions. Key moments to trade are when relevant economic data releases or monetary policy decisions occur. CFDs offer a way to speculate without physically owning the currency, though careful risk management is required.

The reality is that when the dollar will rise depends heavily on how interest rates, inflation in both countries, and political stability evolve. If the Fed maintains higher rates than Banxico and Mexico continues to face inflationary pressures, the dollar will likely continue to appreciate. Investors seeking opportunities should pay close attention to statements from both central banks and monthly economic indicators. In the long term, the dollar’s strength seems sustainable as long as the gap in monetary policies persists and uncertainty in Mexico remains.