USD/MXN Price Analysis: Mexican peso struggles to cheer oil recovery

• USD/MXN pulls back from one-week high following WTI’s extended recovery.
• Mexico declared a state of emergency as coronavirus cases crossed 1,000 mark.
• The US sends troops to the Mexico border to stop drug trafficking, safeguard against the virus spread.

USD/MXN drops from the one-week top to the intraday low of 24.17, currently around 24.25, during the early Asian session on Thursday. Amid coronavirus (COVID-19) crisis and the US allegations of drug trafficking, Mexican peso seems to take clues from the recent recoveries in the oil prices.

Oil prices recover amid hopes of curtailed supplies…

Be it the US-Iran tension or push for the Saudi Arabia-Russia peace, not to forget US President Donald Trump’s meet to the major oil companies on Friday, WTI benefited from all of them to clear $21.00, around $20.80 now.

Elsewhere, Mexico health Ministry declared a state of emergency on Wednesday after the COVID-19 cases crossed 1,000 mark.

Also on the negative side could be the US push to stop drug trafficking, the entrance of virus-infected people via the Mexican border. Late Wednesday, the US Attorney General mentioned coordinating with the Mexican side to combat drug trafficking. Furthermore, the Trump administration sent additional 500 troops, as per New York Post, to back up immigration officials as they try to prevent people infected with the coronavirus from entering the US.

Considering the recent coronavirus action in Mexico, coupled with broad US dollar strength and WTI weakness, the pair traders are likely to await fresh signals for further upside.

Technical analysis

Buyers are looking for entry beyond 24.60/65 area to target 25.00 and the record high, marked last week, around 25.45. Alternatively, 22.85/80 acts as nearby key support.