USD/MXN

The peso is the most extended risk-on currency in the world, held at a risk-on price in a
risk-off regime.

We are long USD/MXN at the 17.35 area, targeting 18.40, over an 8–12 week horizon.

Three forces line up against the peso into the summer:
(1) a stuck-hawkish Fed at 3.50–3.75% and a firm dollar (DXY ~99.4), with US inflation back near 3.8% blocking further cuts;
(2) a compressed ~290 bp carry differential that has stopped widening after Banxico's final cut to 6.50%;
(3) the summer USMCA formal review, a guaranteed source of tariff-tinged headline risk the spot rate has not discounted, layered on top of an active Strait of Hormuz oil shock that is already driving safe-haven dollar demand and EM-FX outflows.

Speculative long-peso positioning is already unwinding alongside BRL and ZAR.

Confirmation: weekly close above 17.60 and bids held on USMCA/Hormuz headlines.
Falsification: a credible, durable Middle East de-escalation plus a constructive USMCA opening restoring the
risk-on carry bid (peso back toward 17.00) — exit on a weekly close below 16.85.
Consensus reference: Rabobank 17.9 over three months; our 18.40 reflects the underpriced joint tail.