The price of the USDMXN exchange rate has cooled from election volatility but a potential price high may mean that Mexican peso strength is not what investors expect on tariffs.
USDMXN – Daily Chart
The price of USDMXN has slipped to 20.58 after some extreme volatility around the US election. There is a potential double top in play now.
The currency market has been active as Donald Trump said he would impose day one tariffs of 10-25% on countries such as Canada, China, and Mexico.
Mexican President Claudia Sheinbaum sent Trump a strong letter in response to his tariff threats where she warned Mexico would retaliate with its own but signaled she would like to work with the US.
Trump said the tariffs would remain in place until Mexico took steps to stop illegal border crossings and drugs such as fentanyl from entering the US.
“If even a small percentage of what the United States allocates to war were instead dedicated to building peace and fostering development, it would address the underlying causes of human mobility,” Sheinbaum added.
Mexico’s economic minister also said tariffs could threaten 400k American jobs. Canadian PM Justin Trudeau spoke with Trump and has called a meeting with his country’s premiers after they warned a 25% tariff would be “devastating” for the country’s workers.
The response from the Chinese government was that “no-one will win a trade war or a tariff war”.
The potential double top in the USDMXN also hints that maybe the idea of a US win from tariffs is overstated.
