Mexican Peso rallies to a one-month high on Hormuz deal speculation

The Mexican Peso surges to a one-month high on Tuesday as talks between the US and Iran could reopen the Strait of Hormuz, easing global inflationary pressures by freeing ship traffic. At the time of writing, the USD/MXN pair trades at 17.26, after reaching a high of 17.33.

USD/MXN slides as US-Iran negotiations ease global inflation concerns, as energy prices drop

Geopolitical news is driving financial markets. Negotiations between the US and Iran are a tailwind for risk-sensitive currencies like the Mexican Peso, which also benefits from the interest rate differential with the US and Mexico, which favours the latter.

A possible interim Iran deal is gaining traction, according to officials familiar with that matter. Before the Wall Street open, US Treasury Secretary Scott Bessent said that a deal could be reached as soon as today or tomorrow, a view echoed by US Secretary of State Marco Rubio.

Data in Mexico revealed that June’s Consumer Confidence improved for the second straight month on a monthly basis. Annually, it retreated for the nineteenth consecutive month.

Meanwhile, attention turns to the Bank of Mexico (Banxico) Interest Rate Decision on August 6. According to Prime Terminal data, there's an 93% probability that rates will remain at 6.50%, with only a 7% chance of an increase at the upcoming meeting.

Across the southern border, the US JOLTS vacancies for June dropped from 7.537 million to 7.359 million, falling short of the forecast of 7.4 million. The relatively low number of layoffs suggests limited firing and hiring activity, with approximately one vacancy for each unemployed individual, indicating a stable labour market.

The US schedule will feature jobs data, led by the ADP Employment Change, the job openings survey, jobless claims and the July Nonfarm Payrolls report, on Friday, August 7.

USD/MXN Price Forecast: Technical outlook

In the daily chart, USD/MXN trades at 17.2545, retaining a bearish near-term bias as spot holds below the cluster of simple moving averages around 17.4149 and the shorter-term downward trend-line break at 17.4188. The Relative Strength Index (14) at 38.6 sits just above oversold territory, suggesting that while selling pressure is easing slightly, the pair remains under structural topside supply.

On the downside, the next notable structural floor emerges near the long-term downward trend-line break at 15.7289, which acts as a distant support zone should the current slide extend. On the topside, initial resistance is seen at the grouped 50/100/200-period simple moving averages around 17.4149, followed closely by the short-term descending trend-line break at 17.4188; a daily close above this band would be needed to alleviate the current bearish tone.