What to Expect from the Dollar Against the Peso in 2025? A Risk and Opportunity Analysis

The USD/MXN approaches 19.94 pesos per dollar, driven by a perfect storm of political uncertainty, contrasting monetary decisions, and geopolitical volatility. If you are an investor or simply monitor the exchange rate, you need to understand what is really happening with the dollar forecast and where this currency might head in the coming months.

The current reality: Why is the dollar rising against the peso?

Two key factors are strengthening the dollar. First, Donald Trump’s possible victory in the November U.S. elections has spiked demand for dollars as a safe-haven asset. His promises of 200% tariffs on Mexican vehicles have scared investors, who prefer to hedge in dollars. Second, political uncertainty in Mexico following Claudia Sheinbaum’s judicial reform has raised doubts about the country’s institutional stability, further weakening the peso.

Technically, the pair fluctuates between 16.26 and 20.15 pesos in its 52-week range, with high volatility and constant liquidity. This means there are broad opportunities for traders, but also significant risks.

Dollar forecast for 2025: Who is right?

Analysts disagree. Longforecast predicts the dollar could reach 22.63 pesos in December 2025, while CoinCodex is even more bullish, expecting 25.83. Conversely, Wallet Investor and Tradersunion are more conservative, projecting declines to 18.77 and 19.13 respectively. This wide range reflects genuine uncertainty about how political and economic events will unfold in both countries.

Market-moving data

Uneven economic growth: Mexico projects a GDP growth of 1.3% for 2025 according to the IMF, while the U.S. expects a solid 2.1%. This gap favors the dollar, as investors seek higher returns in U.S. assets.

Interest rate conflicts: Banxico has started cutting rates from 10.50%, weakening the peso. The Federal Reserve, although also reducing rates (anticipating declines to 4.25%-4.50%), maintains competitive yields. The dollar strengthens when it offers better returns than its competitors.

Persistent inflation: Mexico struggles with inflation between 3.7% and 3.9%, above the 3% target. This structural weakness constantly pressures the peso downward.

Oil dependency: Every drop in crude oil prices hits the Mexican economy harder than the U.S., widening the gap between the two currencies.

Technical analysis: What do the charts say?

The Bollinger Bands show USD/MXN fluctuating around 19.88 with moderate volatility. The RSI is at 53.42 — a neutral territory — suggesting the pair could move sideways in the short term without a clear direction. However, the RVI at 34.60 indicates a slight bearish bias, implying that upward momentum could weaken in the coming days if support at 19.50 does not hold.

If the dollar breaks the resistance of 20.00 sustainably and the RSI does not show overbought conditions, it could continue upward. Conversely, if it falls below 19.50 accompanied by a bearish RVI, a correction might begin.

How to invest in USD/MXN?

Available options:

• Direct Forex trading: Buying and selling pairs on trading platforms
• Specialized funds: Like S&P/BMV, which replicate the pair’s movement
• Derivatives: Futures and options for higher leverage
• CFDs: Contracts that allow speculation without owning the physical currency, ideal for quick moves

The market operates 24/5, but liquidity and volatility vary by session. Federal Reserve announcements, U.S. economic reports, political events, and OPEC news generate significant movements.

Trading signals for 2025

Buy: If the dollar’s bullish forecast is confirmed and it breaks 20.00 without overbought RSI, especially if Banxico continues rate cuts. Banxico’s rate cuts typically weaken the peso, creating breakout buying opportunities.

Sell or close positions: If RSI exceeds 70 (overbought signal) or if the pair falls below 19.50 with bearish RVI confirmation. These levels are critical decision points.

Historical perspective

The peso has experienced deep crises (1980s), stabilization with NAFTA (1990s), turbulence due to oil (2014-2018), and COVID-19 shock. Each event left scars on the USD/MXN relationship. This history suggests that political and external events will continue to be decisive.

Factors you cannot ignore

USD/MXN responds to: interest rate differentials, trade deficits, political stability, oil prices, and relative inflation. The U.S. enjoys the status of a global reserve currency, giving it a structural advantage. Mexico, more vulnerable to external shocks, sees its currency under constant pressure.

Conclusion: Volatility is the new normal

In 2025, the dollar forecast points to relative strength against the peso, driven by growth gaps, competitive rates, and Mexican political risks. For investors, this means opportunities in long dollar positions, but with strict risk management. CFDs can amplify gains but also losses.

The key is to stay alert to Banxico and Federal Reserve decisions. If Mexican inflation remains high and growth weakens, the dollar could continue upward pressure. In the longer term, improvements in Mexican political stability or growth surprises could reverse the trend.

In an environment of uncertainty, defensive investors should consider maintaining exposure in dollars, while active traders can capitalize on the rapid fluctuations that will undoubtedly continue to shape USD/MXN in 2025.