The Mexican Peso (MXN) is currently facing a weakening trend in its key pairs as the odds of former President Donald Trump winning the US presidential election in November have increased. This shift comes after a period where Trump was trailing behind US Vice President Kamala Harris in the polls. Trump’s plans to impose significant import tariffs on Mexican goods, particularly cars, could have a negative impact on the Mexican economy and reduce demand for the Peso.
The latest national opinion poll conducted by TIPP Insights on October 17-19 shows Donald Trump leading with 49% of the vote against Harris’s 47%. Betting websites also suggest equal chances of Trump and Harris winning the election. Elon Musk’s announcement to offer voters in swing states a chance to win a $1 million jackpot if they vote for Trump has further boosted the former president’s campaign.
The Mexican Peso may also be affected by the defensive stance of global investors towards emerging market assets. Concerns over the Federal Reserve’s decision to lower US interest rates by a significant percentage at its September meeting, alongside disappointments in Chinese stimulus measures, could be contributing to this trend. Despite a strong US economy being positive for Mexico, higher US interest rates make EM assets less appealing to global investors, including assets from Mexico and Brazil.
In terms of technical analysis, the USD/MXN pair is showing a resumption of its rally within a rising channel after a brief pullback. A bullish Hammer Japanese candlestick pattern formed on Friday neutralized a bearish Shooting Star pattern, indicating a potential continuation of the uptrend. The pair is currently on the rise, targeting the next level near the September 10 high at 20.13. The MACD momentum indicator is also showing a strong upward movement after hitting the zero line, supporting a mildly bullish outlook for the pair.
Overall, the Mexican Peso is facing challenges due to the potential impact of a Trump victory in the US presidential election, as well as investor defensiveness towards EM assets. The currency’s performance is also being influenced by global economic factors, including interest rate decisions and stimulus measures. In the short term, the USD/MXN pair is showing signs of a bullish continuation, with technical indicators supporting a potential uptrend. Investors will closely monitor developments in the US election and global economic conditions to gauge the future performance of the Mexican Peso.
