• The Mexican Peso slides into a ravine after Donald Trump threatens to slap 25% tariffs on Mexican imports. 
• The Peso faces further pressure from expectations that Banxico will start cutting interest rates more aggressively due to easing inflation. 
• Technically, USD/MXN rallies to the top of a mini range within which it oscillates in the short term.

The Mexican Peso (MXN) declines by an average of one and a quarter percent in its most-traded pairs on Tuesday after President-elect Donald Trump said he would place a 25% tariff on goods entering the US from Mexico and Canada unless the countries reduced illegal migration and the cross-border traffic in illicit drugs. Trump's threat was mainly aimed at Mexico, where powerful cartels manufacture Fyentanol before smuggling it across the border into the US. 

The MXN weakened to 20.75 Pesos to one US Dollar (USD) on the news, from a closing price of 20.31 on Monday. Mexico is one of the US’s largest trading partners, with imports from the country totalling $454.8 billion in 2022, up 18.9% ($72.2 billion) from 2021, according to the Office of the United States Trade Representative.