USD: EM and G10 Divergence. Bullish. We remain USD bulls but recognize that USD could see some correction against EUR in the near term as European yields head higher on the back of reflationary signs. This could spill over to mild weakness against other G10, but we remain bullish against EM. Higher volatility will reduce the attraction of EM carry, particularly as core yields rise across the board, narrowing interest rate differentials. In the medium term, we still expect USD to be a broad outperformer. EUR: Draghi Gives EUR Legs. Bearish. The ECB did not push back against higher yields in the Euro Area, which could ... (full story)