Despite US President Donald Trump’s warning of imposing tariffs on the European Union (EU), the Mexican Peso (MXN) has maintained a steady position against the US Dollar (USD). At the moment, the USD/MXN pair is trading below the significant psychological level of 19.30 as traders take into account current developments in Mexico and the United States. This includes the recently released Trade Balance data by the National Institute of Statistics and Geography of Mexico (INEGI), which showed a trade deficit of $88 million in April, lower than the predicted $160 million. However, this is a decrease from the previous month’s surplus of $3.442 billion.
In addition, on Friday, Trump announced on his Truth Media social media that he plans to impose a 50% tariff on EU imports starting June 1st, due to the difficulties in negotiations with the EU. Recent events in the US, such as the passage of the ‘big beautiful’ tax bill and a credit rating downgrade by Moody’s, have caused the US dollar to weaken, resulting in a higher demand for alternative assets.
The USD/MXN pair has dropped below 19.30 and is currently consolidating below the 10-day and 20-day Simple Moving Average (SMA) at 19.39 and 19.49, respectively. A break above 19.30 could lead to a test of these levels, and if the May low of 19.23 is broken, it would indicate a continuation of the downtrend. The Relative Strength Index (RSI) is currently at 38.92, indicating strong downward momentum. If the downward trend persists, the next support levels to watch for are the May low of 19.23, followed by the October low of 19.11, and then the psychological level of 19.00.