Mexican Peso holds near 17.00 as US-Iran strikes weigh on Peso

The Mexican Peso (MXN) erases some of its earlier gains against the US Dollar (USD) on Tuesday as the US and Iran launched successive strikes against each other, souring risk appetite and weighing on the emerging market currency. The USD/MXN pair trades at 16.99, virtually unchanged.

USD/MXN stalls as risk appetite fades before US jobs data

Geopolitics are driving price action in the financial markets. The White House ordered attacks near the shores of the Strait of Hormuz, aimed at diminishing Iran’s capabilities to disrupt sailing near the Strait. Iran retaliated as Fars reported the launching of retaliatory attacks against US bases and interests.

This pushed the Greenback higher, as measured by the US Dollar Index (DXY). The DXY, which measures the buck’s performance against six currencies, is up 0.27% at 99.68.

Data from the US suggested the Federal Reserve (Fed) could raise rates, as the labor market remains solid. Business activity in the manufacturing sector, although cooling, remains solid, according to the ISM report.

The ISM Manufacturing PMI in August continued in expansion territory, down from 55.6 to 54.6, but missing forecasts of 55.2. The JOLTS job openings survey showed that hiring was weaker than the forecast of 7.3 million, at 7.217 million.

Ahead, the US economic calendar includes the Fed’s Beige Book, jobs data, the ISM Services PMI for August, and the Nonfarm Payrolls report on Friday.

In Mexico, the schedule was light as S&P Global released the August Manufacturing PMI, which contracted from 51.3 in July to 49.8. Besides this, traders are eyeing the August Consumer Confidence on Thursday.

The Bank of Mexico (Banxico) released its survey of private economists. The poll showed that most analysts trimmed their 2026 inflation projection from 4% to 3.90%, and their 2027 projection to 3.84%. Underlying measures of inflation are expected to drop from 4% to 3.99% by the end of the year, and for 2027 are expected to dip from 3.86% to 3.80%.

The survey showed that the economy is expected to grow by 1.30% in 2026 and 1.80% in 2027. The USD/MXN exchange rate is projected to end at 17.50 by the end of the current year, and at 18.05 by the end of 2027.

USD/MXN Price Forecast: Technical outlook 

In the daily chart, USD/MXN trades at 17.0000, retaining a bearish tone as spot holds below the triple simple moving average cluster around 17.2893 and the shorter-term descending trend-line barrier near 17.3217. Price location under these overhead levels suggests rallies remain capped, while the Relative Strength Index (14) at 38.9 stays below neutral, hinting at weak but not extreme downside momentum after the recent bounce off late-August lows.

On the topside, initial resistance is seen at the downtrend line coming from 18.1651, now projecting around 17.3217, with the grouped 50/100/200 simple moving averages clustered near 17.2893 reinforcing this supply zone. On the downside, there is no nearby technical floor until the longer-term support reference at the prior trend-line break around 15.4181, leaving the pair vulnerable to further declines should sellers push decisively away from the 17.00 handle.