The ATR figure is, indeed, 1227 pips. Why such a large number? Because the USD/MXN price is large.
USD/MXN = 18.9449 (on your chart) can be thought of as: $1 = 189,449 Mexican peso pips.
1227 pips is a tiny percentage of such a large number of pips.
Specifically, the 1227-pip ATR figure that is troubling you is less than 2/3 of 1% of the USD/MXN price.
With exotic pairs, like USD/MXN, all the metrics tend to look strange, compared to the majors.
Here is a screen-shot I took a little while ago, in which I expanded the view to show only the last 14 daily candles on the USD/MXN chart. I added the daily range (high-low) for each of the 14 days. As you can see, the value of the ATR(14) for the past 14 days (1136 pips on my chart) appears perfectly normal, in the context of the daily ranges – as it must, because it is the average of those ranges.
(click the image to enlarge it)
When a new candle opens, ATR’s tend to get suddenly distorted, as the 14th previous day’s range is dropped from the average, and the new day’s zero range is factored into the average. This distortion gets eliminated as the day wears on, until an accurate ATR reading is displayed just prior to the close of the current day’s candle. Then the distortion occurs again, as the next day’s candle replaces another previous candle.
Here’s a tip —
If you work with daily charts in the evening, soon after a new daily candle has opened, you can get a more useful ATR figure if you use the previous day’s ATR.