News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View more
Real Time News
  • Do you know how to properly Identify a double top formation? Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature. Learn more about the double top formation here:
  • Dealing with the fear of missing out – or FOMO – is a highly valuable skill for traders. Not only can FOMO have a negative emotional impact, it can cloud judgment and overshadow logic. Learn how you can control FOMO in your trading here:
  • Bitcoin (BTC) started the day on the front foot on the Twitter news before the latest China crypto ban hammered the market lower. Get your weekly crypto forecast from @nickcawley1 here:
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here:
  • Technical analysis of charts aims to identify patterns and market trends by utilizing differing forms of technical chart types and other chart functions. Learn about the top three technical analysis tools here:
  • The US Dollar continues to push higher against ASEAN currencies after the FOMC rate decision. This leaves the USD/SGD, USD/THB, USD/PHP and USD/IDR outlook mostly tilted higher. Get your market update from @ddubrovskyFX here:
  • The US Dollar seems to be back on the offensive against its major counterparts, pressuring EUR/USD and NZD/USD lower as USD/JPY consolidates. USD/CHF surges past key resistance. Get your market update from @ddubrovskyFX here:
  • The Japanese Yen remains in focus with strength potential on risk aversion themes to go along with weakness on themes around higher rates. Get your weekly $JPY technical forecast from @JStanleyFX here:
  • Google finance-related search interest in 'Evergrande' has almost overtaken 'Covid'. 'Taper' doesn't even register on the scale
  • Gold prices gain as potential systemic risks out of China's Evergrande Group roil broader markets. Meanwhile, iron ore is ticking higher after a big drop on Monday as China steps up steelmaking curbs. Get your market update from @FxWestwater here:
USD/MXN Outlook: Debt Rating Downgrade May Bring Further Weakness for the Peso

USD/MXN Outlook: Debt Rating Downgrade May Bring Further Weakness for the Peso

Daniela Sabin Hathorn, Analyst
Mexican Peso Chart

Source: IG

Main USD/MXN Talking Points:

  • The US Dollar retreats after continued Central Bank and government stimulus reignites risk-appetite
  • USD/MXN dips below 23 but regains upward momentum as Mexico receives a credit downgrade

Another week of heightened volatility comes to an end and the USD/MXN regains a slight uptrend after a step-back during the week. The US Dollar has been steadily losing ground against G10 currencies as governments and Central Banks pledge unprecedented levels of fiscal and monetary stimulus to combat the impact of COVID-19 on the world economy. This has caused weakness in the dollar as investors recover an appetite for risk and undo some of the flight to safety trades we have seen in the last few weeks.

The continued support from the Federal Reserve has also caused the dollar to retreat against emerging market currencies, usually considered to be highly risky and strongly correlated to growth. After a period of relative stability had seen EMFX push higher before the COVID-19 outbreak took place, USD/MXN reached an all-time high last week when the exchange rate surpassed the 25 pesos per dollar mark. This week’s price action has seen the pair dip below the 23.00 handle, but Friday’s trading session has seen a small rebound back towards 23.50.

But more bad news lies ahead for the Mexican Peso, as S&P Global has downgraded Mexico’s long-term debt rating from BBB+ to BBB given the significant impact that COVID-19 is expected to have on its economy. Not only has the credit rating agency downgraded its rating it has also set the rating outlook to negative, which points to another possible downgrade in the next 12 to 24 months.

This has placed Mexico’s rating to just two categories above what is considered to be a speculative investment, causing concern amongst investors. Up until recently, the Mexican Peso has been benefiting from a high inflation-adjusted carry trade, even after a series of continuous rate cuts by Banxico, which has left the current rate at 6.5%, the Mexican Peso is still able to offer much better returns than most other currencies. But this rating downgrade could reduce the investment flow towards the Mexican Peso, which would in turn appreciate the USD/MXN exchange rate.

In their statement, S&P Global pointed out that potential increases in the energy sector's contingent liabilities could worsen the sovereign's debt levels and lead to subsequent downgrades. The financial profile of Pemex, a government-owned oil company, has weakened significantly over the past five years and has become more vulnerable in the midst of declining oil prices, which could have a large impact on the country’s rating.


The push above 22.05 saw USD/MXN create an all-time high which did not stop until just below 25.50. Looking at the daily chart we can see how Thursday’s price action stopped just above the Fibonacci retracement of 38.2% from the multiyear highs, bouncing back around the 22.85 level before continuing higher and regaining the 23.00 handle. If bears manage to regain the upper hand, we could see some resistance around this 38.2% retracement level at 22.74, on its way to the next Fibonacci level at 21.94.

On the upside, the overnight session has seen some resistance at 24.05 which could be re-tested if the 23.6% Fibonacci level at 23.84 is cleared.


USDMXN Daily Price Chart

--- Written by Daniela Sabin Hathorn, Junior Analyst

Follow Daniela on Twitter @HathornSabin

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.