The Mexican peso rose against the US dollar after US inflation data failed

• The Mexican peso is trading higher against the US dollar on Friday following the release of US personal consumption expenditures inflation data.
• Core personal consumption spending in the US slowed to 0.2% in April from 0.3% in the previous month.
• Mexico is scheduled to vote to elect a new president on Sunday.
• USD/MXN is falling within a strong short-term uptrend.

The Mexican peso (MXN) rose against the US dollar (USD) on Friday after launch From US personal consumption spending data for April. This measure is the Federal Reserve Bank’s (Fed) preferred measure of inflation and fell to 0.2% month-on-month in the core personal consumption expenditures component from 0.3% previously. Analysts had expected it to remain unchanged at 0.3%.

The rest of the PCE data came in line with analyst estimates, however, the decline in core PCE suggests that inflation may cool more quickly than previously thought in the US. This in turn increases the probability Nourish it He may see fit to start lowering interest rates. Low interest rates tend to be negative for a currency because they attract fewer inflows, so the data negatively impacted the US Dollar (USD).

The main event for the Mexican peso on the horizon is the Mexican presidential election on Sunday.

USD/MXN is trading at 16.98 at the time of writing, EUR/MXN is trading at 18.46 and GBP/MXN is trading at 21.66.

Mexican presidential elections

Mexico’s presidential election scheduled for Sunday is likely to see Morena Party candidate Claudia Sheinbaum replace Andrés Manuel López Obrador (AMLO) as president of Mexico. Sheinbaum leads the next most popular candidate by 20% in the polls.

Her term is likely to see an expansion of Obrador’s generous social welfare program, and she has pledged to increase the minimum wage by about 11%. This is likely to boost consumer spending, the main driver of growth in recent quarters, but could make it harder for Banxico to reduce inflation, says Kimberly Spervichter, emerging markets economist at Capital Economics.

Threat of superiority

Although Donald Trump was convicted of 34 counts of falsifying business records, he still stands a chance at re-election in November. In fact, his conviction galvanized support for the embattled candidate from within the ranks of the Republican Party and led to an influx of donations to his campaign fund, according to AP News.

The US-Mexico Trade Agreement (USMCA) is due to be reviewed in 2026, and there is a risk that Trump, if re-elected, would reimpose tariffs on Mexican goods. Such a move would also hamper Mexico’s immediate prospects.

For this reason, Spervichter believes that “the peso’s period of outperformance has largely come to an end,” and expects the currency to weaken significantly to $19 to $20 during the next (Mexican) president’s term.

Technical Analysis: The USD/MXN pair retreated within the uptrend

The US dollar/Mexican peso – or the number of pesos that can be bought with one US dollar – declines and then recovers in a short-term uptrend. Given that “the trend is your friend,” the odds are in favor of a continuation of the rally.

4-hour chart of USD/MXN

The USD/MXN pair now sets its sights on the main trend line (black) at around 17.25. A break above the May 30 high at 17.13 would likely confirm an extension towards the trend line target.

However, medium and long-term trends remain bearish, increasing the risk of the pair reversing lower. However, there are no signs of weakness from the price action yet. A decisive break above the major trend line would strengthen the bullish case and indicate a bullish reversal in the medium term.

A decisive breakout will be accompanied by a long green bar that closes near its high or three consecutive green bars in a row.