Emerging markets are now trying to stabilize after the initial shock in April, when the Trump administration announced new tariffs. But it now appears that even Emerging Markets could start building a new recovery, on speculation of successful trade negotiations within next 90 days (Trump tarrifs pause), because we know that no-one wins in Trade wars.
At the same time, the US dollar remains weak and continues to fall sharply, with growing speculation that interest rates may be lowered in the US later this year. This opens the door for capital to flow out of the US and into Emerging Markets.From an Elliott Wave perspective, we see a clean and constructive pattern: a leading diagonal from the 2023 lows, followed by a deep A-B-C correction that retraced right into the 61.8% Fibonacci level around the 38 area. Since then, a strong rebound has followed, and it suggests that Emerging Markets could perform well in the months ahead.Meanwhile, the dollar looks set to stay in a broader bearish trend, with near-term downside risk toward an equality-based target around the 95 level.
Grega
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