Emerging markets had a crappy day and Latin America is still open and having the worst day of all. Shares are down over 7% across the region. Given the high correlation between emerging markets and EUR/USD, this is something we watch closely. Remember how exposed European banks are to the emerging markets of Central and Eastern Europe as well as Latin America. This should help keep EUR/USD under pressure in the near-term.
Resistance remains intact toward 1.2630/50. We’d cover shorts on a move back above 1.2650. 1.2445 and 1.2330 are the near-term targets on the downside. 1.2300 barriers are rumored, dealers report.
