USD/MXN Outlook for 2025: Is the Dollar on the Rise or a Correction Ahead?

The dollar forecast against the Mexican peso has become a central topic for investors in 2025. The USD/MXN pair reflects the economic gap between two closely linked economies, but with very different dynamics. While the dollar is strengthening driven by divergent monetary policies, the peso faces external pressures that make it vulnerable to any changes in the global environment.

Technical Indicators Reveal Short-Term Consolidation

Technical analysis of the USD/MXN pair provides clues about its immediate behavior. Prices fluctuate near the 19.88 pesos per dollar level, a key area defining future movement.

Bollinger Bands show moderate-high volatility. The price has recently touched the upper band, indicating aggressive buying, but a retreat toward the middle line suggests a consolidation phase may be developing. If the pair sustainably breaks above 20.00, an upward momentum is expected. Any fall below the middle band would point to a correction.

The (Relative Strength Index) (RSI) stands at 53.42, a neutral territory. This means the market is neither overbought nor oversold. A move toward 70 could indicate overbought conditions and a risk of retracement. Conversely, drops below 30 would create buying opportunities at depressed levels.

The (Relative Volatility Index) (RVI) marks 34.60, reflecting a bearish bias in short-term momentum. This reinforces the idea that a correction could come soon if support at 19.50 does not hold.

Fundamental Dynamics: Opposing Forces

Beyond technical numbers, the dollar forecast rests on deep macroeconomic realities. Economic growth projections diverge notably. The IMF estimates Mexico will grow just 1.3% in 2025, while the Bank of Mexico forecasts 1.0%. In contrast, the US is expected to reach 2.1% according to Vanguard, creating a differential that naturally attracts capital to US assets.

Monetary policy widens this gap. Banxico maintains rates at 10.50%, but a series of cuts are expected during 2025. The Federal Reserve also reduced rates by 50 basis points in September 2024 but maintains competitive yields. This asymmetry favors the dollar: although both central banks are easing, the US retains greater relative attractiveness for investors seeking returns.

Inflation complicates the peso scenario. Vanguard estimates Mexican core inflation will close 2024 between 3.7% and 3.9%, above the 3% target of the Bank of Mexico. This inflationary pressure weakens the currency and favors the dollar.

Geopolitical Factors Increase Volatility

Two external events shape the dollar forecast in 2025:

The 2024 US elections: Donald Trump leads polls with aggressive protectionist proposals, including tariffs of up to 200% on vehicles imported from Mexico. If implemented, these tariffs would raise the cost of Mexican imports and hit peso demand, strengthening the dollar.

Mexican political uncertainty: The judicial reform promoted by Claudia Sheinbaum caused friction when a judge ordered its removal from the Official Gazette. The government’s refusal to comply raised doubts about institutional stability, a factor that historically weakens emerging market currencies.

Predictions for 2025: Wide Range of Scenarios

Five specialized sources project the USD/MXN exchange rate with varied results:

This dispersion reflects inherent uncertainty. The more bullish projections (CoinCodex, Longforecast) suggest the dollar could reach 25+ pesos before year-end, driven by geopolitical risks. The more conservative projections imply a range of 18-20 pesos. Any investor must recognize this inherent volatility.

Historical Lessons

The USD/MXN pair has been under pressure for decades. The debt crisis of the 1980s caused massive devaluations. NAFTA (the 1990s) temporarily stabilized the currency by attracting foreign investment. The oil price drop in 2014-2015 had a severe impact, highlighting Mexico’s oil dependency. The COVID-19 pandemic (2020) and US electoral events (2016, 2020) caused recurrent turbulence.

This pattern suggests that the Mexican peso remains vulnerable to external shocks, while the dollar acts as a safe haven during times of uncertainty.

How to Trade USD/MXN in 2025

Via Forex: Online trading platforms allow direct currency pair trading, leveraging 24-hour liquidity, five days a week.

Through funds: Specialized currency investment funds replicate the USD/MXN trajectory without requiring direct trading.

Using derivatives: Futures and options contracts offer leverage to speculate on directional movements.

With CFDs: Derivative financial instruments allow speculation on the USD/MXN value without physically owning the currencies, amplifying both gains and losses.

Operational Signals for Investors

Buy entry: A sustained break above 20.00 without RSI overbought conditions could signal strong bullish momentum. Continued weakening of Banxico with new rate cuts would amplify this scenario.

Exit or close: RSI above 70 warns of overbought conditions. Drops below 19.50 with a bearish RVI would suggest closing long positions or exploring sales.

Key Variables Influencing the Dollar Forecast

Interest rates: Increases by the Federal Reserve strengthen the dollar; increases by Banxico, conversely, can temporarily defend the peso.

Trade balance: Mexican surpluses (mainly with the US) strengthen the peso; deficits weaken it.

Political stability: Institutional clarity reinforces the peso; uncertainty erodes it.

Oil prices: As a net exporter, falling oil prices weaken the Mexican peso dramatically.

Inflation: Inflationary pressures in Mexico erode the peso; moderation in the US strengthens the dollar.

Probable Scenarios for 2025

In the short term (until May), the dollar forecast points to consolidation with upside risks from divergent monetary policies and US electoral decisions. Short-term investors can capitalize on volatility but must manage risks rigorously because leverage amplifies both gains and losses.

In the medium term (June-September), greater clarity on US policies could define trends. If Trump implements aggressive tariffs, the dollar would strengthen. If the Federal Reserve accelerates cuts, the upward impulse could be limited.

In the long term (until December 2025), the peso’s stability will depend on improvements in Mexican political risk perception and oil price developments. Long dollar positions would be favorable in global uncertainty scenarios; defensive positions if signals of stabilization converge.

Final Reflection

The dollar forecast against the Mexican peso in 2025 is not a certainty exercise but a probability one. Fundamental factors suggest dollar strength in the short term, but technical indicators warn against excessive movements. For investors, the key is to monitor monetary policy decisions in both countries, political events in the US, and oil price dynamics. Volatility will continue to be the defining characteristic of this pair in 2025.