You can still maintain a relationship with both your nephew and his wife, for all you know it could be important to him to know that not everyone in his family feels/acts the same way that his mother does. But you will need to be prepared that some in the family may not like it and give you trouble over it, especially your sister. So you will need to make it very clear that their issues are not yours and you will not tolerate being stuck in the middle of it.