Mexican Peso traces options market signals to drop towards 17.00 as FOMC looms

USD/MXN stays on the front foot, edging higher amid early Wednesday morning in Asia, after reversing from the weekly low the previous day. In doing so, the Mexican Peso (MXN) pair prints mild gains around 16.95 by the press time. It’s worth noting that the quote remains lackluster of late as traders await Federal Open Market Committee (FOMC) monetary policy meeting announcements.

That said, the USD/MXN pair’s previous day’s run-up could be linked to the options market bias as it failed to justify the US Dollar’s retreat from a two-week top.

US Dollar Index (DXY) reversed from a two-week high while snapping a five-day uptrend, falling to 101.26 at the latest.

Talking about the options market signals, the one-month Risk Reversal (RR) of the USD/MXN pair, a measure of the spread between call and put prices, marked a positive close of 0.080 number by the end of Tuesday’s North American trading session.

In doing so, the Mexican Peso pair also takes clues from the weekly RR as it prints 0.063 numbers while staying firmer for the second consecutive week.

Also read: USD/MXN recovers from weekly lows amid risk-on mood, awaits Fed decision