USD/MXN: Mexican Peso struggles to gain ground amid oil price rally

• Oil price rise fails to put a bid under the Mexican Peso. 
• Virus outbreak and fears of deeper economic downturn seem to be keeping the Peso under pressure. 

From USD/MXN’s perspective, Thursday’s oil price rally seems to have gone unnoticed. 

The currency pair remains sidelined near 24.30, having ended Thursday on an indecisive note with a Doji candle. To put it another way, the Mexican Peso failed to draw bids on Thursday and remains flat in Asia. 

The black gold’s price, as represented by the West Texas Intermediate crude, jumped by more than 25 percent from $20.80 to $27.32 on Thursday as President Trump said that he spoke with the Saudi Crown Prince, and hoped and expected that Saudi Arabia and Russia would scale back output by 10 million barrels or more. 

While WTI ended the day with 16 percent gains, the USD/MXN closed on a flat note. The MXN did rise to 23.76 per US dollar, but the bulls failed to keep gains, allowing the currency to fall back to 24.22 by the end of the day. 

At press time, a barrel of WTI is changing hands near $23.80. The pullback in oil prices likely indicates the investors are skeptical that production cuts alone can lift prices back to near recent highs. 

Meanwhile, the MXN’s inability to cheer the oil price rise could be attributed to the broad-based dollar demand. 

Investors are preferring to hold cash, mainly US dollars, as a prolonged global economic downturn is looking increasingly likely. The idea of a V-shaped recovery no longer looks feasible, as the coronavirus outbreak is showing no signs of slowing down. The number of cases across the globe have crossed above the 1 million mark. The US alone has more than  238,000 cases, according to CNN.

Technical levels