USD/MXN Analysis: Mexican peso weakens ahead of the Fed decision

USD/MXN is trading more than 0.5% higher as the Mexican peso weakens ahead of the Federal Reserve’s rate decision. The article frames the move as a mix of dollar strength, shifting Fed expectations, and lingering trade uncertainty after new U.S. tariffs on Mexican goods. Markets currently price about a 66% chance the Fed leaves rates unchanged, but a 33% chance of a hike and more than a 56% chance of another hike by the September 16 meeting. On the Mexico side, inflation has eased to 3.37% in June from a 2026 peak of 4.59% in March, limiting pressure on Banxico to tighten further. However, Mexico’s 6.5% policy rate still offers a carry advantage over the U.S. 3.75% rate, a spread that could narrow if the Fed turns more aggressive. Technically, USD/MXN remains range-bound, with resistance at 17.67, a key barrier at 17.41, and support at 17.10.