USD/MXN falls as Mexico’s GDP surprise drives a sharp Mexican Peso rebound

• Renewed Peso buying sends USD/MXN down 1.17% to 18.56.
• Annual GDP growth in Mexico reaches 3.2%, exceeding the 2.5% forecast.
• Ahead of the US midterms, the probability of a December Fed rate rise slips to 77%.

Strong GDP data released last Friday have helped the Mexican Peso (MXN) recover against the US Dollar (USD) at the start of the week. With the latest ISM Manufacturing PMI report also under assessment, traders are preparing for the outcome of Tuesday’s US elections. USD/MXN stands at 18.56, a decline of 1.17%.

USD/MXN falls as stronger growth and reduced Fed rate-rise expectations weigh on the Dollar

Mexico’s Gross Domestic Product (GDP) increased by 0.9% quarter on quarter in Q3 2026, according to figures published last Friday by INEGI, Mexico’s National Statistics Agency. Growth exceeded the 0.7% estimate, although it slowed from 1.4% in Q2. Annual expansion reached 3.2%, compared with economists’ forecast of 2.5%.

Commenting on the figures, Mexico’s Finance Minister said growth could come in at the top of the government’s forecast range, provided the momentum continues.

October’s Institute for Supply Management (ISM) Purchasing Managers’ Index (PMI) in the US climbed to 55.5 from 54.5, surpassing expectations of 54.6. Despite the indication of broad economic strength, money markets lowered the probability of a 25-basis-point interest rate increase to 77% from 80% a week earlier, according to the CME FedWatch Tool.

A sharp fall in oil prices, driven by growing hopes that peace talks between the US and Iran will resume, could explain the shift. Reports of a breakthrough in negotiations have emerged, with the two sides approaching a preliminary agreement.

The US mid-term elections are another focus for USD/MXN traders. Polymarket puts the Democrats’ chances of securing control of the US Senate at 75% and of the US House of Representatives at 96%.

USD/MXN Price Forecast: Recovery holds as technical bias remains bullish

Trading at 18.5752 on the daily chart, USD/MXN continues to advance comfortably above the cluster of 50-, 100- and 200-day simple moving averages near 17.7802, supporting a bullish short-term bias. A widening gap from the established descending resistance trend line drawn from 21.0808 indicates that the broader recovery remains intact. Meanwhile, the 14-day Relative Strength Index has eased from overbought levels towards 58.6, suggesting that upward momentum remains constructive but has become less forceful.

The main hurdle above current prices is the descending resistance trend line, which still caps the broader structure. A decisive rejection at that line could restrain the rally. Below the market, the moving-average cluster around 17.78 offers initial support, followed by the horizontal floor at 16.89. Buyers would be expected to return at that lower level if the correction deepens.

(The technical analysis of this story was written with the help of an AI tool. Know more.)