FX.co ★ Peso Under Pressure Amid Tariff Fears and Fed Cues

The Mexican peso depreciated to more than 20.2 per USD, retreating from a four-month high previously observed on March 18th, as the US dollar made gains and impending tariff threats heightened concerns about Mexico's economic growth. The Organization for Economic Cooperation and Development issued a cautionary statement, indicating that persistent US tariffs on Mexican goods could lead to a recession, with projections suggesting a decline of 1.3% in 2025 and 0.6% in 2026 if these tariffs remain intact. Ongoing trade uncertainties—aggravated by President Trump's protectionist policies—continue to unsettle investors, particularly ahead of significant domestic economic data, such as Mexico’s economic activity index and mid-month inflation reports. Meanwhile, the financial market is keenly observing the Bank of Mexico's forthcoming policy decisions. Additionally, with the US Federal Reserve hinting at further rate cuts amid escalating inflation and a weakening growth perspective, the demand outlook for the peso remains limited given its strong economic ties with the United States.