USD/MXN stays defensive around 17.20 amid the early hours of Wednesday’s Asian session, after posting the biggest daily jump in a month to extend the previous week’s rebound from the lowest level since 2016.

In doing so, the Mexican Peso (MXN) pair justifies the options market signals to pare recent gains as traders brace for Fed Chair Jerome Powell’s bi-annual Testimony, up for publishing on Wednesday, as well as Thursday’s Banxico Interest Rate Decision.

That said, the one-month Risk Reversal (RR) of the USD/MXN pair, a measure of the spread between call and put prices, prints the biggest daily jump in a monthly by flashing a 0.112 figure, up for the second consecutive day, per the latest options market data from Reuters.  With this, the USD/MXN pair’s weekly RR snaps the four-week downtrend with the 0.150 mark.

The Mexican Peso pair’s consolidation might have also taken clues from the pre-event consolidation, as well as the market’s latest risk-off mood that underpinned the US Dollar’s haven demand.

Also read: USD/MXN: MXN surrenders to USD amidst crucial week for Banxico decision, Fed’s Powell speech eyed