• USD/MXN has printed a fresh day's high at 17.24 amid a risk-aversion theme.
• Fed Powell is expected to deliver hawkish guidance as core inflation in the United States is still showing persistence.
• Banxico is expected to keep interest rates steady consecutively for the second time.

The USD/MXN pair has printed a fresh day's high at 17.24 in the early European session. The major is in a bullish trajectory as the market sentiment is showing caution and the US Dollar Index (DXY) is trying to come out of the woods.

S&P500 futures have posted minimal losses, carry-forwarding bearish cues observed on Tuesday. The risk-aversion theme is in action as investors are worried ahead of Federal Reserve’s (Fed) chair Jerome Powell's testimony. The US Dollar Index (DXY) has attempted a break above the consolidation formed in a range below 102.60.

Going forward, Fed Powell’s testimony will remain in focus. Fed Powell is expected to deliver hawkish guidance as core inflation in the United States is still showing persistence. Inflation in the US service sector has remained elevated and excess demand for labor than its supply indicates that more interest rate hikes are required to bring down inflation.

Apart from the Fed Powell’s testimony speech from the latest Fed nominees will also be in focus. Fed Governor Lisa Cook and vice chair Philip Jefferson have backed taming sticky inflation.

Meanwhile, headlines that China is preparing a military training facility in Cuba against the US have put investors on their toes.

On the Mexican peso front, investors are awaiting the interest rate decision by the Bank of Mexico (Banxico), which will be announced on Thursday. A poll from Reuters shows that Banxico will keep interest rates steady consecutively for the second time. Till now, the central bank has hiked interest rates to 11.25%. Investors should know that Mexican inflation has already softened to 5.84% in May than its annual peak of 8.7%.