Mexican Peso weakens as Iran sanctions offset Mexico’s inflation data

The Mexican Peso lost ground against the Greenback on Monday, even though economic data showed that inflation accelerated in the first half of August, while economic growth was softer than expected. Consequently, the USD/MXN exotic pair trades with gains of over 0.25%, at 16.96.

USD/MXN weakens as US sanctions lift caution despite firmer Mexican inflation

Economic data from Mexico showed that headline inflation rose from 3.1% to 3.26% in the first 15 days of August, according to the national statistics agency. Underlying inflation, which excludes volatile items, cooled by two-tenths of a percentage point, from 3.95% to 3.94%.

At the same time, the Gross Domestic Product (GDP) for the second quarter expanded by 1.4%, up from the -0.3% contraction witnessed in Q1 2026, but missed estimates for a 1.5% increase.

Even though the data could have warranted further upside, US sanctions on Iran, levied by the Treasury Department, capped the Mexican currency’s advance.

Mexico's President Claudia Sheinbaum is seeking a trade deal with the US, following US President Trump's imposition of tariffs on Canada. Worth noting that the US imposed 50% tariffs on certain Canadian goods as bilateral talks collapsed.

US Treasury Secretary Scott Bessent announced “unprecedented” economic measures against Iran, targeting vital lifelines such as digital assets, technology, gold, aviation, and shipping. The economic D-Day called Operation Outcast sanctioned nearly 60 entities linked to Iran, including broker networks and shadow fleet vessels across several countries. The actions aim to cut funding for the IRGC. 

Aside from this, traders eye the release of US growth, inflation and jobs data, as well as Fed Chair Kevin Warsh’s speech at the Jackson Hole Symposium on Friday.

USD/MXN Price Forecast: Technical outlook

In the daily chart, USD/MXN trades at 16.9564, extending its decline below the cluster of longer-term simple moving averages (SMA) which now cap the upside near 17.3341. Price also remains under the nearer downward resistance trend-line break at 17.3653, reinforcing a bearish tone despite the Relative Strength Index (RSI) at 31.55 edging away from oversold territory and hinting at only modestly stabilizing momentum.

On the topside, initial resistance is seen at the triple SMA cluster around 17.33, followed by the more recent downward trend-line break near 17.37, where sellers are likely to reassert control if a corrective bounce develops. On the downside, the longer-term descending trend-line break level at 15.51 acts as a distant structural support zone, with the current setup suggesting that any recovery will struggle while USD/MXN trades beneath the 17.33–17.37 band.