In recent weeks, the US Dollar (USD) has recovered quite broadly. Rather than trading at around 1.18, EUR/USD has frequently traded below 1.16, and on Friday it even approached 1.15. The USD's strength is partly due to a lack of US data, and partly due to the rather hawkish press conference with the Fed chairman after the last meeting, Commerzbank's FX analyst Michael Pfister notes.

USD has gained almost 3% against G10 currencies

"However, the USD recovery has been uneven: while G10 currencies appreciated slightly more than emerging market currencies in the first half of the year, the opposite has been true in recent weeks. On average, the USD has gained almost 3% against G10 currencies, but only 1% against emerging market currencies."

"Such EM outperformance is unusual. In the first half of the year, emerging markets benefited from the anticipation of stronger Fed interest rate cuts, which gave local central banks more leeway for their own loose monetary policy. However, in recent weeks, markets have priced in fewer basis points of Fed rate cuts, yet EM currencies have remained resilient."

"This may be a sign that discussions about the future prospects of emerging markets, which have been ongoing for several months, are beginning to bear fruit in view of ongoing deglobalization and often abundant raw materials in those countries. However, this may just be an anomaly that will be corrected in the coming weeks. In any case, this development should be watched over the coming weeks."