USD/MXN portrays a corrective bounce from the lowest levels since May 2016 as it prints mild gains around 17.25 amid early hours of Wednesday’s trading.

In doing so, the Mexican Peso (MXN) pair justifies the options market signals to lick its wounds.

That said, one-month Risk Reversal (RR) of the USD/MXN pair, a measure of the spread between call and put prices, snaps a three-week losing streak with 0.009 figure in its latest weekly readings per the options market data from Reuters.

The Mexican Peso pair’s consolidation might have also taken clues from the pre-Fed anxiety, even as the US inflation signals pause to the Fed’s 10 rate hikes.

It’s worth noting, however, that the RR remains downbeat on the daily basis while reversing Monday’s corrective bounce, to -0.080 at the latest.

Hence, the USD/MXN may witness further recovery amid the pre-Fed positioning, as well as due to the options market signals. However, the Mexican Peso buyers remain hopeful amid dovish expectations from the US central bank.

Also read: Forex Today:  After US CPI, attention turns to the FOMC