To make dip in microwave, in 1 1/2-quart microwavable bowl, microwave onion, garlic and water on High 2 to 3 minutes or until onion is tender and water has evaporated. Stir in cheeses; microwave on High 1 1/2 to 2 minutes or until cheeses are melted. Stir in tomatoes, chiles, salt, chili powder and ground red pepper. Microwave on High 2 minutes or until mixture is hot.
For a festive touch, tie a ribbon with a small ornament around a serving dish.