EMEA: CEE carry seen vulnerable as flows reverse – BNY

💡 DMK Insight

LatAm FX inflows hitting a six-month high while EMEA faces heavy selling is a big deal for traders right now. This divergence signals a potential shift in risk appetite among investors, with LatAm markets attracting capital as they may offer better growth prospects compared to the EMEA region, which is grappling with economic uncertainties. Traders should pay close attention to this trend, as it could lead to increased volatility in currency pairs involving these regions. For instance, if the Brazilian real or Mexican peso continues to strengthen, it could create opportunities for long positions against weaker EMEA currencies like the euro or pound. However, it’s worth noting that such inflows could also be driven by speculative trading rather than fundamental strength, so caution is warranted. Monitoring economic indicators from both regions, such as inflation rates and GDP growth, will be crucial in assessing the sustainability of these trends. Keep an eye on key levels in currency pairs; for example, if the euro dips below a certain threshold against the peso, it might trigger further selling pressure in EMEA currencies.