A break of the 18.40 mark should send USD/MXN towards 18.50, its highest level since March.

Going forward, however, we highlight that as the Fed maintains its higher for longer narrative, we expect shifting labour dynamics in the US (through its effect on remittances to Mexico) to remain the largest downside risk for the Peso, while a move away from the fiscal conservatism seen so far in the AMLO administration is starting to create some concerns in debt markets. 

We maintain our end-of-year USD/MXN forecast at 18.00 and 18.50 for Q1 2024.