Understanding the USD/MXN Forecast for 2025

The USD/MXN exchange rate is poised to be influenced by a variety of factors in 2025, including economic growth, monetary policy, and geopolitical dynamics. Here, we delve into the trends and predictions that are shaping the forecast for this currency pair.

Key Drivers of the USD/MXN Forecast

Several key factors are expected to drive the USD/MXN exchange rate in 2025:

• Monetary Policy Divergence: The interest rate differential between the Federal Reserve (Fed) and the Banco de México (Banxico) will play a crucial role. The Fed’s recent rate cuts and Banxico’s more aggressive easing could reduce the interest rate differential, potentially favoring further USD/MXN upside[2].
• Economic Slowdown: Mexico’s economic slowdown and the dynamism in the US economy are expected to boost the Greenback. This divergence in economic performance could lead to a stronger USD against the MXN[2].
• Trump’s Trade Policies: The incoming US administration under Donald Trump is expected to introduce protectionist policies, including tariffs, which could exert upward inflation pressures and trigger another round of higher prices. This would prevent the Fed from easing policy and could strengthen the USD against the MXN[2].

Technical Analysis

Technical analysis suggests that the USD/MXN is currently in a consolidation phase, awaiting a catalyst to break out of its current range. The monthly chart shows signs of a ‘bearish harami’ candle chart pattern, which has bearish implications and opens the door for further downside. Key support levels include the 100-month Simple Moving Average (SMA) at 19.47, followed by the 50-month SMA at 19.18, and the psychological 19.00 figure[2].

Short-Term Predictions

Short-term predictions for the USD/MXN exchange rate include:

• January 2025: The USD/MXN is expected to start the year at around 20.12197, with a high of 22.13417 and a low of 18.10978[4].
• February 2025: The exchange rate is forecasted to range between 20.62662 and 22.68928, with a low of 18.56396[4].
• March 2025: The USD/MXN is expected to continue its downward trend, with a high of 22.12633 and a low of 18.10336[4].

Long-Term Forecasts

Long-term forecasts for the USD/MXN exchange rate include:

• 2025: The USD/MXN is expected to decline by 3.887% to 19.300[1].
• 2026: The exchange rate is forecasted to drop further to 18.916[1].
• 2029: The USD/MXN is expected to reach 15.819 by August 2029, with a high of 15.923 and a low of 15.806[1].

Investment Strategies

Given the current trends and predictions, investors may consider the following strategies:

• Short Selling: Investors could short sell the USD/MXN pair, expecting it to decline in the short term.
• Long-Term Holding: Investors could hold onto their USD/MXN positions, expecting the exchange rate to drop further in the long term.