Written by Antonio Di Giacomo, Senior Market Analyst at XS.com
The Mexican peso opened the January 12 session on a positive note against the U.S. dollar, stabilizing around $17.91 pesos per dollar. This appreciation reflects a favorable external environment for the local currency, as the weakening of the greenback has opened room for stronger demand for emerging-market currencies with relatively solid fundamentals.
One of the key factors behind this move has been the growing doubts about the Federal Reserve’s independence, following the public disclosure of an investigation into its chair, Jerome Powell. Episodes like this tend to unsettle investors, as they call into question the institutional credibility of the world’s most influential central bank.
The market’s immediate reaction has been a broad sell-off in dollar-denominated assets, putting downward pressure on the dollar index and supporting currencies such as the Mexican peso. This behavior has also been reflected in increased interest in safe-haven assets like gold and silver, which have posted significant gains in recent sessions.
Adding to this backdrop, recent U.S. employment data have shown signs of cooling in the labor market. Weaker job creation has reinforced the perception that the U.S. economy may be losing momentum, increasing expectations that the Fed could adopt a more accommodative monetary stance during 2026.
From a technical perspective, the exchange rate is showing mixed signals. While the broader structure still points to a bearish trend for the dollar against the peso, some indicators suggest a short-term technical rebound, especially if the pair finds support near the $17.80 – $17.70 zone.
The peso’s recent performance also reflects Mexico’s continued appeal within the emerging markets universe, particularly in an environment where real interest rates remain relatively high, and capital flows continue to seek yield with a reasonable degree of risk control.
Nevertheless, the outlook remains fragile. The combination of political uncertainty in the United States, geopolitical tensions, and market sensitivity to any comments from monetary authorities keeps the exchange rate exposed to bouts of volatility that
could quickly alter the prevailing trend.
In conclusion, the Mexican peso is in a favorable phase, supported by the dollar’s weakness, doubts about the Federal Reserve’s independence, and signs of cooling in the U.S. economy. However, the global environment remains highly dynamic, meaning the exchange rate’s trajectory will depend on both upcoming macroeconomic data and political developments that continue to shape investor risk perception.