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Analysts at Rabobank suggest that while the severely battered Turkish lira – a major risk barometer for EM currencies these days – regained composure following its precipitous fall, a cautious approach to risky assets prevails as the USD continues to appreciate.

Key Quotes

“The DXY Index decisively broke above the June/July tops at 95.529/652. The June 2017 high at 97.871 is the next potential target for the USD bulls. If obtained the 100 level would be the next objective.”

“This bullish technical outlook for the DXY Index – underpinned by the ongoing widening in the interest rate differentials as the Fed continues to raise rates – will have consequences for central banks across emerging markets.”