The Mexican Peso (MXN) has seen a significant drop in its value against major currencies, particularly the US Dollar (USD), after Donald Trump secured 267 electoral votes in the 2024 US Presidential Election. The Peso fell nearly 3% against the USD, a reaction to Trump’s looming threats of high tariffs on Mexican imports, alongside the broader strength of the US Dollar driven by his economic policies.
Trump’s victory, alongside the Republican Party’s dominance in both the Senate (42/51) and Congress (179/197), signals a shift that could have profound implications for the Peso. The Mexican currency is currently trading around 20.60 to the USD, but further weakness is expected. According to Mexican financial news outlet El Financiero, if Trump’s administration pushes forward with a Republican majority, the Peso could fall to as low as 21.14 to 22.26 against the Dollar.
Impact of Tariff Threats and Republican Control
The Peso’s plunge is primarily attributed to Trump’s vocal stance on imposing punitive tariffs on Mexican imports, a move that would significantly affect Mexico’s economy. As the USD strengthens on the back of these Dollar-positive policies, the Peso faces mounting pressure. A potential tariff hike could harm Mexico’s trade relationships with the US, further driving down the Peso’s value.
Trump’s victory also adds to the political uncertainty in Mexico, especially with the Republican clean sweep. Analysts warn that this could compound the Peso’s weakness, with foreign investors possibly retreating amid rising concerns about Mexico’s economic stability and its relationship with the US.
Domestic Issues Add to Peso’s Struggles
In addition to the election-driven turmoil, the Mexican Peso is also under pressure due to domestic political issues. The Mexican Supreme Court recently rejected a controversial reform that would allow judges to be elected by popular vote. Critics argue that this undermines the independence of the judiciary, potentially leading to less favorable conditions for foreign investment. The rejection of this reform fuels concerns over Mexico’s legal and political stability, which further dampens investor confidence.
Also read : USD/MXN Breaks Key Resistance At 20.80- Peso Faces Further Decline With Trump’s Potential Victory
Technical Outlook for USD/MXN
On the technical front, the USD/MXN currency pair is displaying a strong bullish trend. After breaking above key resistance levels and closing a chart gap from earlier in the week, the pair continues to trade within an established rising channel. The Relative Strength Index (RSI) remains just below overbought territory, suggesting room for further gains in the short term.
If the USD/MXN pair breaks above the 20.80 level, it could signal more upside, with the psychological level of 21.00 becoming the next major target. Traders are closely watching these technical indicators, which suggest that the trend is likely to continue in favor of the US Dollar in the coming days.
