From the Hungarian florin to the Argentine peso, emerging market currencies are the flash point for global growth fears as the Fed pulls back from its easy money policy.
Many of those currencies were under pressure Friday as selling also spread across world equities markets. The euro and European stocks were especially challenged after weaker-than-expected European inflation data. U.S. stocks fell sharply but came off their lows after European markets closed for the weekend.
"If somebody devalues over the weekend, or the contagion spreads in emerging markets, this is a tenuous time for the market," said Dan Greenhaus, chief global strategist at BTIG. The Fed is reducing its support, and the data has been mixed."
From Turkey to South Africa, markets have been reacting to local issues as well as the one big trend that the Federal Reserve confirmed again at its meeting this week. For a second time, the central bank pared $10 billion from its asset purchases. It is on a course to end the now-$65 billion program this year, using the improving U.S. economy as its guide.
Robert Sinche, head of global currency strategy at Pierpont Securities, said one big problem with markets is that many investors and funds jumped into a "conventional wisdom" trade at the start of the year, in which they were long equities and emerging markets, and short U.S. Treasurys. Those positions have not worked out as planned, with stocks selling off and the 10-year Treasury yield at the lowest level since early November.
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"The Fed is increasing its balance sheet more slowly and the ECB has been shrinking its balance sheet for a while. Both those things suggest volatility is going to remain elevated for a while," Sinche said. "Investors just don't have the staying power with bad positions."
For the most part, U.S. strategists see the emerging markets issues as contained and more problems around individual countries with current account deficiencies, weak currencies and rising inflation. The volatile selling kicked off last week when weak Chinese manufacturing data sparked fears of a global slowdown.
(Check out the graphic: A hard landing in China)
"Thus far, there is little evidence of any negative feedback effects from emerging market disturbances back into U.S. credit markets or financial conditions," wrote Michael Darda, chief economist and market strategist at MKM. "That said, an ongoing equity market selloff/Treasury market rally should be expected to put some upward pressure on risk spreads and thus tighten financial conditions. However, we do not expect this pressure to be of a sufficient magnitude to either slow the recovery or cause the Fed to reconsider its tapering of asset purchases."
While emerging world central banks have been taking aim at the meltdown in currencies—most notably Turkey's near 5 percent rate hike this week—the International Monetary Fund on Friday issued a warning they must stay vigilant.
"Several emerging countries have responded forcefully in recent days," the IMF said. "While many countries also have solid fundamentals with high reserves, fiscal space and inflation under control, the turbulence highlights the need for coherent macroeconomic and financial policies, good communication and, in some cases, the need for urgent policy action to improve fundamentals and policy credibility."
Europe was the center of activity Friday, and the euro slumped amid weaker inflation data. Declines in dollar terms were outsized for the Hungarian florin and Polish zloty, as the euro fell against the dollar. The Russian ruble was down 0.7 percent on the day in midday trading, though the Turkish lira was higher.
"I think people are still spooked," said Marc Chandler, chief currency strategist at Brown Brothers Harriman. "If anything is happening over the weekend, people expect it will be bad. … We're also approaching the debt ceiling."
He watches the differential between German and U.S. 2-year notes, which has been widening. "It's because the U.S. is down four basis points, but Germany is down 13. The wider differential should be good for the dollar, but it's not because of Fed tapering. It's because Europe has low inflation and they're worried the ECB will do something next week."
(Read more: What the EM selloff means for European stocks)
Chandler said he doesn't expect action from the ECB at its Thursday meeting, unless "you think doing something is talking dovishly."
A flurry of central bank meetings have the market's focus for next week, including the Reserve Bank of Australia, the Bank of England and the European Central Bank. The Hungarian central bank and the Czech National Bank also have meetings.
Dan Katzive, head of foreign exchange strategy for North America at BNP Paribas, said Eastern European currencies, under pressure Friday, were playing catch up to moves elsewhere.
—By CNBC's Patti Domm. Follow her on Twitter @pattidomm.