Dollar to Peso 2025: What to Expect from the USD/MXN Forecast

The USD/MXN pair continues to be one of the most dynamic in the currency markets. After reaching levels close to 19.94 pesos per dollar in recent sessions, experts project a 2025 filled with uncertainty for this parity. This forecast of the dollar against the Mexican peso depends on multiple factors ranging from monetary policy decisions to geopolitical events.

Technical Signals: What Do the Indicators Say?

The current behavior of USD/MXN offers important clues for traders. The RSI stands at 53.42, reflecting a market in balance without clear overbought or oversold pressures. This neutrality suggests that sideways movements could dominate in the short term, at least until clearer catalysts emerge.

The Bollinger Bands show contained volatility around a 20-period moving average. The price has recently touched higher levels, but retreats toward the mid-zone indicate that the pair could consolidate before making more decisive moves. A sustained break above 20.00 would open the door to greater dollar appreciation.

The RVI is currently at 34.60, signaling a short-term bearish bias. This momentum indicator suggests there could be corrective pressure in the coming days if the pair does not hold its current supports, particularly the 19.50 level.

Economic Factors Shaping the Forecast

The growth gap between the two nations will be crucial. The United States is projected to have GDP expansions near 2.1%, driven by resilient consumption and strong labor markets. Mexico, in contrast, faces more modest prospects with estimates of 1.3% according to the IMF and 1.0% according to BBVA Research, reflecting internal demand weakness.

This difference in economic dynamism typically favors the dollar, attracting capital from investors seeking higher returns in U.S. assets. The peso, on the other hand, suffers the consequences of a slower economy and less attractive flows for speculative investments.

Central Bank Decisions: The Pulse of Parity

Banxico has initiated a cycle of interest rate cuts from the 10.50% recorded in September 2024. These cuts are expected to continue through 2025, which generally puts downward pressure on the peso’s attractiveness for international investors. Lower interest rates in Mexico mean lower yields on peso-denominated instruments.

The Federal Reserve is also in easing mode, having implemented a 50 basis point cut in September. Projections point to additional cuts by year-end, bringing rates to a range of 4.25%-4.50%. Despite these reductions, dollar yields would remain competitive compared to pesos, reinforcing the dollar’s relative strength in this forecast for 2025.

Political Uncertainty: Elections and Reforms

Donald Trump’s lead in U.S. electoral polls introduces a significant uncertainty factor. His promises to impose 200% tariffs on imported vehicles from Mexico generate market concern, pushing investors toward the safety of the dollar and away from the Mexican peso.

In Mexico, political developments also raise concerns. Judicial reform and resulting institutional tensions have impacted perceptions of political stability, a factor that international investors consider seriously when assessing risk.

Exchange Rate Projections: Divergent Views for USD/MXN

Expert forecasts show considerable dispersion of opinions on the dollar’s outlook against the peso in 2025:

By January 2025, estimates range from 19.23 to 21.50 pesos per dollar. Longforecast is the most bullish with 21.50, while Tradersunion is the most conservative with 19.23.

Mid-year projections suggest a wider range, with CoinCodex estimating 22.25 and Wallet Investor just 19.03, showing deep discrepancies about the pair’s trajectory.

For year-end, expectations are even more dispersed. CoinCodex projects the highest level at 25.83, while Wallet Investor forecasts just 18.77, illustrating the difficulty in predicting this exchange rate accurately.

Historical Context: Lessons from the Past

The USD/MXN pair has experienced episodes of notable volatility over decades. The debt crisis of the 1980s led to drastic peso devaluations. NAFTA in the 1990s brought relative stability thanks to increased foreign investment. Oil price drops in 2014-2015 and OPEC decisions in 2016 and 2018 significantly impacted Mexico due to its dependence on oil exports.

The 2008 global financial crisis, the 2016 and 2020 presidential elections, and the COVID-19 pandemic also caused significant fluctuations. This history underscores that USD/MXN responds to both domestic and international factors.

Underlying Dynamics: Why Does the Dollar Usually Prevail?

The dollar tends to strengthen when Federal Reserve rates rise, attracting global investment into U.S. assets. The peso weakens when political stability is questioned or oil prices fall, affecting Mexico’s dollar revenues.

Mexican exports, mainly to the U.S., temporarily support the peso, but cannot fully offset devaluation pressures when external factors turn adverse. The inflation gap also plays a role: high inflation in Mexico reduces the peso’s purchasing power and makes it less attractive to investors.

Trading Signals for Market Participants

For bullish positions: A sustained break of the dollar above 20.00 with RSI not showing overbought conditions would signal sustained bullish momentum, especially if Banxico maintains its rate-cut trajectory. Continued interest rate cuts in Mexico could open more room for dollar appreciation.

For exits or corrections: If RSI crosses above 70, overbought conditions would justify reducing or closing long positions. A fall below 19.50 accompanied by a bearish RVI would indicate opportunities to adopt defensive strategies or even short positions.

Investment Opportunities: When and How to Participate

The Forex market operates 24 hours, five days a week, but liquidity and volatility vary by trading session. Federal Reserve announcements, U.S. economic reports, political events in both countries, and OPEC statements are key dates that generate significant USD/MXN movements.

Investors can access this parity through multiple instruments: direct Forex trading, currency-focused investment funds, derivatives like futures and options, or CFD contracts on authorized platforms. Each instrument offers different risk profiles and liquidity levels.

Final Outlook: Volatility as the Norm

The forecast for USD/MXN in 2025 points to a volatile environment with a general trend of dollar strengthening, albeit with periodic corrections. U.S. elections, monetary policy decisions in both countries, oil prices, and Mexican political stability will remain the main catalysts.

For short-term traders, this volatility presents opportunities but requires rigorous risk management, especially when leverage is used. Long-term, a more stable Mexican currency would depend on improvements in the political context, higher economic growth, and commodity price recovery.

Investors should stay alert to interest rate changes and constantly evaluate the balance between quick profit opportunities and capital protection in a scenario of persistent uncertainty. The dollar could maintain its relative strength in the short and medium term, but conditions can change rapidly depending on geopolitical events and central bank decisions.