Iran peace hopes buoy sentiment as Mexican Peso withstands Dollar strength

• USD/MXN drops 0.57% to 18.56 even as the US Dollar strengthens elsewhere.
• Diplomacy in the Middle East lifts sentiment, although nuclear talks remain excluded.
• Ahead of Mexico's GDP figures, the probability of a December Fed rate rise slips to 83%.

A 0.57% decline takes USD/MXN to 18.56 on Monday, with the Mexican Peso strengthening as risk appetite improves. US technology shares are also advancing following Anthropic's IPO filing. Although the US Dollar is recording substantial gains against major currencies, the Mexican currency is bucking that trend.

USD/MXN slips towards 18.55 as hopes for diplomacy lift risk-sensitive currencies before Fed decision

Hopes that Iran, Turkey, Pakistan and Saudi Arabia, the Mecca Pact members, can resolve the US-Iran conflict through talks are underpinning a positive mood. An Iranian official, however, disclosed that nuclear issues were not included in the discussions. Iran’s President Pezeshkian also said dialogue must take place without threats or pressure. Meanwhile, newswires reported that the US is prepared to launch strikes within 96 hours of receiving orders from US President Donald Trump.

On the economic front, attention is turning to the Federal Reserve's Tuesday and Wednesday meeting. According to Prime Terminal, money markets had assigned a 9% probability to a rate rise, while the likelihood for December stands at 83%, compared with around 90% the week before.

For further guidance on interest rates, traders are looking to US Personal Consumption Expenditures figures, the Fed's favoured measure of inflation. Investors are also positioning ahead of the 3 November midterm elections.

Mexico's economic calendar contained no releases, leaving traders focused on Tuesday's Balance of Trade figures and Friday's Gross Domestic Product (GDP) report.

USD/MXN Price Forecast: Pair maintains bullish technical bias

Trading near 18.5650 on the daily chart, USD/MXN continues to advance comfortably above the cluster of simple moving averages (SMA) at 17.6061, preserving a firmly bullish short-term bias. Fresh highs are being tested above the former descending resistance trend line. At 65.9, the 14-day Relative Strength Index remains positive without reaching overbought territory, pointing to robust but not excessive upward momentum while the pair consolidates at higher levels.

Any corrective decline would first encounter support around the SMA cluster at 17.61, before the more distant horizontal base at 16.89. The current dataset provides no clearly established resistance above the market. Further gains would therefore probably depend on momentum and sentiment until price action establishes a new technical obstacle.

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