$USDMXN - Chance of 17.50 by Month End

Looking at $USDMXN, we've seen a pretty consistent grind lower this year, but the recent bounce off 17.326 today suggests some short-term exhaustion, at least for now. While the broader trend still favors MXN strength, the current level at 17.34564 and the day's range indicate some buying interest emerging around these lows. Inflation prints out of Mexico have been cooling, but the hawkish stance from Banxico might be showing diminishing returns against a more hawkish Fed narrative, or at least a less dovish one than previously priced.

My take is there's a ~35% chance we see a retest or breach of 17.50 before month-end. This isn't a strong conviction play for a full trend reversal, more of a corrective bounce probability. Key drivers would be any further hawkish rhetoric from the Fed, or if oil prices start to show some serious weakness, which could weigh on emerging market currencies. Conversely, a stronger-than-expected rebound in Mexican economic data or a further drop in US inflation expectations could negate this.