Historical article first published 2026-09-29. Levels and commentary refer to the dates stated, not the current session.
Why is the dollar rising? Because the market is already pricing in that the US Federal Reserve (Fed) could raise rates again in October, which makes holding dollars more attractive than holding almost any other currency. This week the effect has been strongly felt in Latin America: the dollar hit two-month highs against the Mexican and Colombian pesos, and in Chile it is hovering at levels not seen since last year.
In this analysis we review what is behind the move, where USD/MXN, USD/COP and USD/CLP stand on Friday, September 25, and which data could change the direction in the coming days.
A rate increase is not an exchange-rate promise
The September 16 FOMC raised its target range to 3.75–4.00%. A 25-basis-point rise means 0.25 percentage points; it does not imply a 0.25% dollar gain. Separate the common US factor from each country’s conditions and what the market had already priced in.
Federal Reserve — FOMC statement, September 16, 2026
Why the dollar is rising: the Fed hiked again
It all starts in Washington. On September 16, the Fed raised its policy rate by 25 basis points to a 3.75%–4.00% range, unanimously (12–0). It was the first hike since 2023, and the statement was clear: "inflation remains elevated."
What weighed most on the market was not the hike itself, but what came next:
- In their projections, 16 of the 18 committee members expect another hike before year-end.
- Several regional Fed presidents have stressed that inflation is not limited to energy. New York Fed President John Williams went as far as saying another hike before year-end "would be reasonable."
- Futures markets assign more than a 50% probability to another hike at the October 28 meeting, a figure that has been rising as solid US data came in.
Add the energy backdrop: with US–Iran tensions around the Strait of Hormuz, Brent has been trading around $100 a barrel. Expensive oil keeps inflation alive and reinforces the case for a more hawkish Fed.
When US rates rise, Treasuries pay more and capital tends to flow back into the dollar. Emerging-market currencies, which partly live off the carry trade (borrowing in cheap currencies to invest in higher-yielding ones), lose part of their edge.
The dollar index (DXY) hits 101
The global gauge of dollar strength is the DXY index, which compares it with a basket of six major currencies. According to AIMPATFX market data, on Friday at 11:00 UTC it trades at 101.01 points, above its 200-session average (99.42) and with a bullish daily trend. This week it topped 101.2, its highest level since July.
The flip side is the euro: EUR/USD falls to 1.1400, with a daily RSI of 30.9, on the edge of oversold territory.
Dollar in Mexico: USD/MXN breaks above 17.60
The Mexican peso has been one of the hardest hit this week. On Wednesday, September 23, it fell 1.27% in a single day, its worst session since March 3, and the exchange rate closed at 17.52 pesos per dollar, the highest level since July 23. On Thursday, Banxico's FIX rate stood at 17.50.
That same Thursday, Banxico held its rate at 6.50% for a third straight meeting and warned it will not follow the Fed "mechanically." Mexico's headline inflation rose from 3.10% to 3.42% between the first half of July and the first half of September, although core inflation eased from 3.95% to 3.79%.
| USD/MXN (daily chart) | Value |
|---|---|
| Price (Sep 25, 11:00 UTC) | 17.673 |
| 20-session average | 17.242 |
| 200-session average | 17.506 |
| RSI (14) | 75.5 |
| Upper Bollinger Band | 17.634 |
| Average daily range (ATR) | ≈ 0.13 pesos |
With RSI above 70 and price outside the upper Bollinger Band, the move is stretched in the short term. That does not mean it has to reverse, but moves this large are often followed by pauses or pullbacks.
For the structural drivers of the pair, see our guide to what moves the dollar against the Mexican peso.
Dollar in Colombia: the TRM jumps above 3,260
In Colombia the move has been even sharper. Thursday's official TRM rate (September 24) was 3,264.39 pesos, 55.73 pesos higher than the day before (+1.74%) and 4.34% higher than a week earlier. It is the highest level in more than two months. That same Thursday, the dollar opened at 3,314.93 in the wholesale market.
On Friday at 11:00 UTC, USD/COP trades at 3,354, with a daily RSI of 72.7 and well above its 20-session average (3,187). Even so, it remains below its 200-session average (3,508): on a yearly view, the Colombian peso is still far from its worst levels.
The Colombian peso is affected by the Fed, but also by oil, its main export. Our guide to what moves USD/COP and USD/CLP explains that link in detail.
Dollar in Chile: copper no longer holds the rally back
In Chile, the dollar opened Thursday around 967 pesos, levels not seen since 2025. On Friday it trades at 965.3, with the upper Bollinger Band at 968.4 as the first technical reference and a daily RSI of 66.7.
Copper, which usually supports the Chilean peso, has not helped either: it has pulled back from record highs and trades around $6.7–6.8 per pound in London. With the Fed turning more hawkish and the metal losing steam, the Chilean peso loses its two main supports at once.
Scenarios for the dollar in the coming sessions
These scenarios are analysis, not buy or sell recommendations. We use USD/MXN as the reference because it is the most liquid pair in the region.
Bullish scenario for the dollar
- Condition: USD/MXN holds above 17.50 (Thursday's FIX area and the 200-session average) and US data keeps coming in strong.
- Reading: the market would keep raising the odds of an October Fed hike, and the dollar could extend its gains in all three pairs.
- Invalidation: a daily close below 17.50.
Bearish scenario for the dollar (peso recovery)
- Condition: softer US data or a US–Iran deal that makes oil cheaper and lowers inflation expectations.
- Reading: with indicators already overbought, a pullback toward the 20-session average (17.24 in USD/MXN; 3,187 in USD/COP; 944 in USD/CLP) would be technically consistent.
- Invalidation: new DXY highs above 101.3.
With an average daily range close to 13 centavos in USD/MXN and 48 pesos in USD/COP, position size matters more than ever. Review the 1% rule and lot size calculation before trading this volatility.
What data to watch
- US durable goods orders (today, 8:30 a.m. ET / 1:30 p.m. London): the forecast is −3.4% after +1.1% previously.
- Fed speakers: any message about October moves the dollar instantly.
- Oil and US–Iran talks: a reopening of the Strait of Hormuz would make crude cheaper, which could cool inflation and ease the dollar.
- US September jobs report: it arrives in early October and will be the big test before the October 28 Fed meeting.
If you are not sure how to organize these events, our economic calendar guide explains how to read the forecast, the previous figure and the actual result.
Frequently asked questions
Why is the dollar rising against the Mexican peso today?
Because the market is pricing in that the Fed could raise rates again in October, after hiking to 3.75%–4.00% on September 16. Higher US rates attract capital to the dollar and make the peso less attractive, even with Banxico holding its rate at 6.50%.
How high can the dollar go in Colombia?
Nobody can know for sure. Technically, USD/COP is overbought (daily RSI above 70) after rising more than 4% in a week, but it remains below its 200-session average, near 3,508. The Fed and oil will decide.
What happens to the Chilean peso if copper falls?
Copper is Chile's main export and a key source of dollars for the country. When it falls, fewer dollars flow in and the Chilean peso usually weakens. This week a weak copper price and a more hawkish Fed came together.
When is the next Fed meeting?
On October 28, 2026. The statement is released at 2:00 p.m. New York time (18:00 in London).
