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Mexican peso slips under 17.00 as carry demand grows but crowding risk rises
MUFG says USD/MXN moved below 17.00 for the first time since June 2024, but warns that crowded positioning could trigger a sharp reversal.
MUFG analysts Derek Halpenny and Abdul-Ahad Lockhart said the Mexican peso is still benefiting from low FX volatility and steady carry demand, as USD/MXN broke below 17.00 for the first time since June 2024.
They pointed to robust Mexican growth, sticky inflation, and Banxico’s steady policy stance as factors that support carry, even as Mexico’s peso trade faces a risk of abrupt downside if positioning unwinds.
FXStreet also noted that broader FX market conditions are keeping investors cautious, with the US dollar stabilized as participants weigh developments in the Middle East and related uncertainty.