The Mexican peso slipped on Thursday, breaking a long winning streak after the U.S. Federal Reserve cut rates and the dollar caught a bid. Spot trading hovered near 18.38 per dollar by the close, with analysts pointing to the U.S. jobs and factory prints that brightened the greenback’s tone. Mexico’s interest-rate advantage still cushions the peso, but short-term moves remain headline-driven. Traders now look to Friday morning’s aggregate supply and demand release for clues on domestic momentum—and whether the peso’s latest pullback is a pause or the start of a range.
Mexican peso dips
Mexico City, Thursday, September 18, 2025. The peso eased to about 18.38 per dollar, down roughly a third of a percent versus Wednesday’s Bank of Mexico reference, ending an eight-session winning streak against the greenback. The move came as the U.S. Federal Reserve cut rates by 25 bps to a 4.00%–4.25% target range, a decision that firmed the dollar into the close. The Dollar Index finished around 97, up about 0.5% on the day.
Felipe Mendoza of ATFX LATAM said the peso’s setback was tied to the Fed’s move, which markets had mainly discounted. He added that while rate differentials and a still-soft dollar continue to anchor the currency, the peso remains sensitive to headlines, projecting a near-term 18.20–18.60 trading band. Monex analysts likewise flagged the dollar’s rebound after U.S. unemployment and manufacturing readings, calling the backdrop unfavorable for the peso overnight.
Context matters here. Banxico’s policy rate is 7.75% after its August cut, leaving Mexico with one of the widest interest-rate cushions in major FX—an ongoing draw for carry flows even as U.S. rates ease. That spread remains supportive on paper, but U.S. data surprises and risk appetite still drive the day-to-day tape.
U.S. numbers helped the dollar’s tone on Thursday. Initial jobless claims fell to 231,000 in the week ended Sept. 13, reversing last week’s spike and hinting at a labor market that’s cooling but not collapsing. Meanwhile, U.S. manufacturing output rose 0.2% in August, part of a broader industrial print that surprised modestly to the upside. Together, those releases nudged traders back toward the dollar after the dovish headline of a Fed cut.
Near term, dealers expect 18.29–18.43 in overnight flows, tracking the dollar’s drift and positioning ahead of Mexico’s macro calendar. One focal point is Friday’s aggregate supply and demand update from INEGI, due at 6 a.m. local time, which will offer a cleaner read on domestic demand through the second quarter. A firmer-than-feared print could cap dollar gains; a soft one would argue for more two-way trade into next week.
What to watch next
The peso’s medium-term story hasn’t changed: carry still matters, especially with the Fed now easing and Banxico proceeding cautiously. But the near-term balance is delicate. If the Dollar Index holds near 97 and U.S. data keep beating, dips in USD/MXN may be shallow; if U.S. momentum fades, the peso’s rate advantage should reassert. Traders are also tracking how quickly the Fed moves from a first cut to a series of cuts—a path that, if realized, would gradually narrow yield gaps and shift the balance of power back toward Mexico’s domestic fundamentals.
