Mexican Peso dips as US Core PCE renew Fed hawkish bets

The Mexican Peso loses some traction against the US Dollar on Wednesday as traders seem confident that the Federal Reserve could raise interest rates toward the end of the year, following a red-hot inflation report. The USD/MXN trades at 16.95, after reaching a daily low of 16.92.

USD/MXN drifts high as US inflation offsets Banxico’s stronger growth outlook

The Greenback recovered as the Core PCE in July came aligned with estimates and matched June’s reading of 3.3% YoY. Following suit, the PCE headline reading for the same period held steady at 3.7% YoY for the second straight month, exceeding forecasts of 3.6%.

Both readings revealed that the disinflation process stalled and increased the chances of seeing higher interest rates in the US. Money markets had priced in a 74% chance of a 25-basis-point (bps) interest rate increase at the July meeting, according to Prime Terminal.

US Durable Goods Orders —which comprise goods meant to last three years or more—rose by 1.1% in July, exceeding forecasts and June’s 0.5% reading, boosted by transportation equipment.

Across the southern border, the Bank of Mexico (Banxico) released its Quarterly Report for Q2 2026, in which the institution updated its forecasts for several economic indicators.

Regarding economic growth, Banxico expects GDP to rise from 1.1% to 1.5%. Meanwhile, headline inflation is projected to converge to the 3% goal by Q4 2027, a slower pace than in the previous report, the central bank revealed.

Regarding core inflation, is forecast at 3.5%, up from 3.4% and is also expected to reach Banxico’s 3% goal towards the end of 2027. In the meantime, the central bank noted that economic activity continues to slow down due to uncertainty surrounding the review of the USMCA.

Ahead, the US economic docket will feature Initial Jobless Claims on Thursday, followed by the Chair Kevin Warsh's speech at the Jackson Hole Symposium.

USD/MXN Price Forecast: Technical outlook

In the daily chart, USD/MXN trades at 16.9563, extending the pullback and holding below the cluster of simple moving averages (SMA) grouped around 17.3219, which keeps the near-term bias bearish. Price remains well under a medium-term descending resistance trend line drawn from 18.1651, while the Relative Strength Index (RSI) at 31.65 hovers just above oversold territory, hinting at weakening downside momentum but not yet signaling a reversal.

On the topside, initial resistance is located at the triple SMA area near 17.3219, where a daily close above would be needed to ease immediate selling pressure. Further up, the descending trend structures strengthen the cap, with the medium-term line around 18.1651 followed by a longer-term downtrend reference near 21.0808, leaving the pair exposed to fresh lows as long as it trades beneath these levels and lacks clearly defined support nearby.