My son is 1 month old (yesterday) and he's has had a rash around his penis for about 4 days. Initially we were treating it with the Walmart brand rash cream because we'd run out of desitin, but that crap stuck to his skin and caused more irritation than he already had. It was so bad portions of it wouldn't come off the head of his penis even after a bath. We stopped using it after we saw this.

Well 2 days ago my fiancé purchased more desitin and we've been using that since. The rash has shrunk in size, but now his skin in the rash areas is peeling. It doesn't appear to be hurting him at all, I can wipe and touch the area and he doesn't flinch or get upset, but I'm worried that this is the rash getting worse.

This last diaper change I didn't put any more cream, only baby powder because I figured the moisture was causing the peeling. I'm planning on bathing him today, afterwards should I just leave him without a diaper for awhile so the area can air out a bit? I hate seeing him like this. :(

Pic for reference