Whether the dollar rally will continue

It is quite early to say, but there are indications that the dollar rally is likely to go into a consolidation period. Although the JPMorgan Index for EM (Developing Economies) forecasts continue to decline.

Not surprisingly, US bond yields and expectations for a rise in the Fed's interest rate dropped compared to forecasts. It is more likely to go up, but to date it is better to take a retention period.

The EUR / USD chart looks as if it has a double bottom in the area of about $ 1.15, despite the fact that CNH is quickly weakening. It should be noted that some of the high-yielding EM-currencies such as BRL, MXN, TRY and ZAR have begun to recover.

If Trump uses tariffs as negotiating tactics, it will require larger sales in the financial markets to convince investors that the risk is real. There is a strong likelihood that the import tariff against China will be applied if, then, the restrictions on Chinese investments in the US are announced in the coming days. Then EMFX can be again under pressure against the dollar.

This is a current situation, but it is worth considering the possibility of consolidating the dollar in the coming summer. This allows us to look for a long stop position with a stop below the bottom of the unconfirmed technical figure - a double bottom. At the moment the price returns, which gives us a good place to position, with the stop can be pulled a little farther from the bottoms.

Source: Bloomberg Finance L.P.

Graphics: Used with permission of Bloomberg Finance L.P.

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