USD/MXN Soars Above 20.81266 Amid Tariff Tensions

The USD/MXN pair has surged above 20.81266, marking its weakest level since March 2022. This sharp movement is driven by Trump's announcement of a 25% tariff on imports from Mexico, which poses significant risks to Mexico's economy, particularly affecting the crucial auto sector. With the US accounting for over 83% of Mexico's exports, these tariffs could disrupt the trade balance and amplify peso volatility, leading to increased investor uncertainty and potential capital outflow. The Mexican peso has depreciated approximately 20% this year, compounded by concerns over fiscal expansion and a robust US dollar. Retaliatory tariff measures suggested by President Claudia Sheinbaum could further complicate the trade landscape, exacerbating tensions. Traders should closely monitor developments in US-Mexico trade policies and potential domestic policy responses in Mexico. Given the prevailing uncertainty, market participants may seek safer assets, which could further impact USD/MXN movements