What is EUR/MXN?
EUR/MXN is the exchange rate between the euro (EUR) and the Mexican peso (MXN). It shows how many Mexican pesos are required to buy one euro.
EUR/MXN is an emerging-market forex cross that combines the monetary and economic conditions of the euro area with those of Mexico. The pair can be influenced by interest-rate differentials, inflation, economic data, commodity markets, capital flows and changes in global risk sentiment.
In the XTB offer, EUR/MXN is available as a CFD, allowing traders to speculate on movements in the exchange rate without directly holding the underlying currencies. CFDs are leveraged products and carry a high level of risk.
What affects the EUR/MXN exchange rate?
European Central Bank monetary policy
ECB interest-rate decisions and forward guidance can have a significant impact on the euro. Expectations of higher or lower European interest rates can influence EUR demand and affect EUR/MXN.
Banco de México monetary policy
Banxico's interest-rate decisions are an important driver of the Mexican peso. Changes in the policy rate, inflation expectations or the central bank's forward guidance can alter the interest-rate differential between Mexico and the euro area.
Interest-rate differentials
The difference between European and Mexican interest rates can influence capital flows and demand for each currency. Changes in expectations for ECB or Banxico policy can therefore create significant movements in EUR/MXN.
Oil and commodity prices
Mexico has significant exposure to the energy sector, meaning changes in global oil prices can influence the Mexican economy and peso. Commodity-market movements can therefore contribute to changes in EUR/MXN.
Global risk sentiment
The Mexican peso is an emerging-market currency and can be sensitive to changes in global risk appetite. Periods of financial stress can increase demand for perceived safer assets and put pressure on MXN.
Mexican economic data
Mexican GDP, inflation, industrial production, employment, trade and other economic indicators can influence expectations for economic growth and monetary policy, affecting the peso.
Euro area economic data
Eurozone inflation, GDP, purchasing managers' indices and other economic indicators can influence expectations for ECB policy and affect the euro against the Mexican peso.
Capital flows and investment
Foreign investment flows into and out of Mexico can affect demand for the peso. Changes in investor sentiment towards emerging markets can therefore contribute to EUR/MXN volatility.
Trading Characteristics
EUR/MXN generally has lower liquidity than major euro pairs such as EUR/USD and can experience wider spreads, particularly outside the most active trading periods.
The pair can show significant volatility around ECB and Banxico decisions, inflation data, economic releases, oil-price movements and major changes in global risk sentiment.
Because EUR/MXN combines a major currency with an emerging-market currency, movements can be driven by developments in both regions. Traders should therefore consider European and Mexican economic conditions as well as broader global market sentiment.
Important Macroeconomic Data and Events
- Key events and indicators to monitor when analysing EUR/MXN include:
- ECB interest-rate decisions and monetary policy guidance
- Banxico interest-rate decisions and policy statements
- Eurozone inflation and economic growth data
- Mexican inflation and GDP
- Mexican industrial production and employment data
- Eurozone PMI and other business activity indicators
- Global crude oil prices
- Changes in global risk appetite and emerging-market capital flows
