Western and Eastern European currencies have struggled this month compared to the dollar bloc, and the ZAR and (most of) Latam in EM. The performance corroborates with the seasonality of the last four years.

Profit-taking cannot be ruled out this week on bond/equity portfolio rebalancing before month end. Dollar dips may attract buying into Q4 unless incoming US inflation and employment data disappoint.

The decline in EUR/USD and USD/JPY volatility after the passing of Fed and BoJ rate decisions last week suggest the current FX theme of Dollar strength may have further to run into Q4 and may provoke further jawboning by Japanese currency officials and the MoF.