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

The Mexican Peso weakened against the US dollar on Monday, despite Mexico reporting a sharp acceleration in inflation and a softer-than-expected economic growth. The USD/MXN exotic pair rose over 0.25%, trading at 16.96. Mexico's inflation rate increased from 3.1% to 3.26% in the first 15 days of August, while underlying inflation slightly cooled from 3.95% to 3.94%.

Meanwhile, the country's GDP grew by 1.4% in the second quarter, surpassing the previous quarter's contraction of -0.3%. However, these figures did not outweigh the impact of US sanctions imposed on Iran. These sanctions, announced by US Treasury Secretary Scott Bessent, targeted various aspects of Iran's economy, including digital assets, technology, gold, aviation, and shipping, affecting nearly 60 entities.

This development limited the Mexican currency's gains. Analysts suggest that traders will monitor the release of US economic data, including growth, inflation, and jobs statistics, as well as Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole Symposium. Currently, the USD/MXN pair trades at 16.9564, struggling to break above the cluster of longer-term simple moving averages, which now limit upside near 17.3341.

The currency remains under the nearer downward resistance trend-line break at 17.3653, suggesting a bearish tone despite the Relative Strength Index nearing a stable momentum.