How Low Can They Go? Emerging-Market Currencies Near a Key Level
- Breach of Fibonacci level could open the way to further losses
- Technical gauge served as a floor for EMFX late last year
Photographer: Mauricio Palos/Bloomberg
This article is for subscribers only.
Emerging-market currencies, pummeled in the second quarter by a strong U.S. dollar, are closing in on a key resistance level whose rupture could open the way to further declines.
The MSCI Emerging Markets Currency Index has hovered near 1,628.25 since completing its 5.5 percent swoon in the period, barely budging between 1,615 and 1,630. That stability suggests the gauge is testing the Fibonacci projection level of 1,619 that served as a floor in late September, late October and mid-November. If that barrier is breached, the next resistance would be at around 1,580 -- meaning a further 2.5 percent drop.