Mexican Peso rallies to two-year high on US Treasury buyback

The Mexican Peso rallies to a two-year high of 16.94 as the US Dollar weakens amid falling US yields, which retreated after the US Treasury doubled the size of its long-duration bond buyback. The USD/MXN trades at 16.95, down 0.27%.

USD/MXN slides as lower US yields offset Iran uncertainty

Market mood has improved even though the odds for a quick resolution of the US-Iran conflict seem far from materializing in the short term.

Headlines in the Middle East show mixed stances of Tehran and Washington. For example, the 

Iranian Deputy Parliament Speaker said that “We consider the Strait of Hormuz part of Iran and the Islamic Republic will continue to administer it.” At the same time, an Iranian official said that US President Trump's threats to bomb Iran are illogical and have no effect, referring to his statements as absurd, reported Al Mayadeen.

At around 18:00 GMT, the Federal Reserve is likely to release its final meeting minutes. The US economic docket for the remainder of the week includes Initial Jobless Claims, a speech by St. Louis Fed President Alberto Musalem, and the release of S&P Global Flash PMIs.

USD/MXN traders are eyeing the minutes of the Bank of Mexico (Banxico) from its last meeting on Thursday, followed by Retail Sales on Friday. Estimates suggest that sales are expected to increase 0.1% MoM in June, up from a contraction of 0.6% in May. For the twelve months to June, Retail Sales are forecast to rise from 1.6% to 3.1% due to the World Cup.

Besides this, the Peso is favored by the US decision to delay 50% tariffs on Canada, said Janneth Quiroz. Monex’s Director of Economic Analysis.

USD/MXN Price Forecast: Technical Outlook

In the weekly chart, USD/MXN trades at 16.9672, extending its slide beneath the longer-term simple moving averages, with the latest triple SMA reading clustered around 17.7337 as overhead supply. The pair remains capped by a sequence of descending resistance trend lines, with the more recent structure rejecting prices near 17.0058, reinforcing a bearish near-term bias. The Relative Strength Index (14) at 35.9 stays below the neutral 50 line, hinting at persistent downside pressure rather than oversold exhaustion.

On the topside, initial resistance is seen near the recent trend-line rejection around 17.0058, ahead of the broader triple simple moving average cluster at 17.7337. A stronger barrier emerges toward the earlier descending resistance line, where price last stalled around 17.9000, and only a sustained break above these levels would start to ease the prevailing bearish tone. With no clear structural supports defined in the current dataset, further weakness would leave USD/MXN probing for new demand zones below the recent 16.9672 close.