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You are here: Home > Blog > Emerging Forex Market – March 2018

Emerging Forex Market – March 2018

March 22, 2018

The emerging currency market is waiting for the evident rise in rates in the United States from the Federal Reserve.

The reaction will not be so much due to the formal decision (which is already incorporated in prices), but rather to the prospect of further rises that Powell will provide the market.

What we are seeing in recent months is a split of the emerging world. A good trend for the Asian currencies as the South Korean Won, the Taiwan Dollar and the Chinese Renmimbi, while not so good for the Turkish Lira, the Polish Zloty and the South African Rand. Geopolitical events such as the return of tensions between the United States and Iran, between Great Britain and Russia, but also the threats on duties carried on by President Trump, are still ballast for the emerging world currencies. Let's now look at the analysis of the main ones in detail.


Turkish Lira in trouble with UsdTry that is heading again towards the double top of area 3.95. The exchange rate has not even gone close to the 200-day moving average, but it has formalized a bullish head and shoulder that has closed the corrective phase. Now the target is precisely the area of ​​the double top and given that the RSI has just entered the overbought zone, the pressure on the Lira does not seem to be destined to run out shortly.



The threat of new sanctions from the United States and now even Great Britain towards Russia has brought some weakness to the Russian Ruble. The cyberattacks and the story of the poisoning of the Russian spy in Britain, have turned the tensions with the Western world back on. UsdRub once again touched the 55.75 support that has been preventing the war against the dollar for a year. At this point it is possible to come back to area 60, the upper wall of the trading range.



The Mexican peso is in a rally: March is a traditionally positive month the Central American currency. In the last 20 years, UsdMxn has dropped 16 times, an important seasonality that has been respected. UsdMxn, however, has stopped its run near the first short-term support in area 18.50. The 200-day moving average and the trend line started in July 2017 represent the obstacles to a return of strength of the Peso that, in case of a downward break, would reach up to 17.50.



The Chinese Renminbi is still appreciated by international investors as it is still close to the highest level since 2015. Since the beginning of 2017 Cny has earned almost 10% against the US dollar, an insufficient devaluation to reverse the trend in the American trade deficit and probably the result of greater diversification of the Chinese foreign exchange reserves as anticipated long ago by Beijing. Our view is that of a stagnation phase around 6.30 needed to metabolize the fall in recent months. The Fed monetary policy will be very important defining a new directionality in the coming months, also because the choices on the rates of Washington are often replicated by Beijing.


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