EUR/MXN settles above 7-week low, posts weekly loss

The EUR/MXN currency pair settled above recent low of 21.6176, its weakest level since March 26th, in the wake of the Mexican central bank’s policy decision and the latest GDP growth data out of the Euro Area.

Banco de México lowered its key policy rate by 50 basis points to 8.50% at its May meeting, since Mexico’s annual inflation slowed to 3.93% in April, while the local economy grew 0.2% quarter-on-quarter in Q1 of 2025 following earlier weakness.

The central bank indicated that it could continue with similar 50 bps reductions, as the disinflation process is expected to allow some further monetary easing.

Still, Banco de México said it would proceed with caution amid elevated global uncertainty (ranging from trade tensions to geopolitical conflicts), which could either reignite inflation through Peso depreciation or lead to deeper economic slowdown.

At the same time, the Euro Area’s economy registered a 0.3% quarterly growth in the first quarter of 2025, according to Eurostat’s second estimate released on Thursday. The revised figure fell short of the earlier estimate of 0.4%.

However, in annual terms, the bloc’s GDP grew 1.2% in Q1, in line with both the preliminary report and market expectations.

Employment levels within the bloc also inched higher, with the Eurozone Employment Change posting a 0.3% quarterly rise and a 0.8% YoY increase in Q1.

The EUR/MXN currency pair settled 0.24% lower at 21.7314 on Friday.

The exotic Forex pair lost 0.59% for the week.