In FX Talking, the strain is on.

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　　At a time when events in Europe and China are lowering expectations for global growth, financial markets around the world are starting to feel the pinch of the Fed's relentless tightening. With the dollar's trend inversely correlated with the growth cycle around the world, it's apparent that this is a bullish situation for the currency.

　　We expect the dollar to remain strong this summer, despite a tough season for the equities and credit markets. The Fed is still implementing front-loaded tightening, after all. Concerns about the end of globalization and structurally rising interest rates should keep FX volatility at its recent high level.

　　For the rest of the year, we believe that the EUR/USD pair can move in a range of between 1.00-1.10 with a downward tilt. With the Bank of England's Bank Rate still priced at well over 2 percent for this year, USD/JPY advances over 130 may be more difficult currently, but GBP seems increasingly vulnerable.

　　Central and Eastern European currencies continue to be volatile and under pressure. The zloty is our long-term currency of choice, but the forint remains vulnerable as the twin deficits return to the forefront of public debate. The most popular currency in the Czech Republic, the koruna, has been shaken by a reshuffle at the Czech National Bank.

　　Due of China's recession, many commodity currencies are struggling. The Brazilian real and South African rand, both of which have close ties to China, are the most susceptible. The renminbi is still shaky, with the USD/CNY rate potentially falling as low as 6.80.