Emerging markets have rallied this year, even keeping pace with the S&P 500 since the March low.
From that March 23 bottom, the EEM emerging markets ETF and S&P 500 have rebounded more than 63%.
The group's next move depends on the U.S. dollar, according to Matt Maley, chief market strategist at Miller Tabak.
"The DXY Dollar Index, even though it was selling off for quite a while, it actually stabilized a little bit the last four months, and it's bounced off the $92 level four or five different times," Maley told CNBC's "Trading Nation" on Monday. "If you see a breakdown in the dollar below that $92 level, that's going to help the small outperformance the emerging markets we've seen over the last six, eight months become much bigger."
A weaker dollar is highly correlated with emerging market gains — the value of foreign currency-denominated assets rises for U.S. investors as the greenback falls. A lower dollar also helps emerging market economies that have borrowed U.S.-denominated debt.
The DXY index traded at $92.52 at Monday's close.
"I think [emerging markets] could easily test the 2018 highs and even the 2007 all-time highs if [the dollar] does break down," he said.
The EEM ETF would need to cross $55.83, its record high set in October 2007. It closed Monday at $49.19.
Michael Binger, president of Gradient Investments, is warier of the emerging markets as the Covid-19 pandemic puts pressure on the global economy.
"I would not jump into emerging markets broadly at this point in time. I still think the world economy is still pretty fragile, very economically sensitive right now," Binger said during the same "Trading Nation" segment.
He does see one exception, though — Chinese stocks.
"I would endorse going into China right now. I feel they're going to have some really strong momentum and GDP growth, they're going to be positive this year and positive next year. So I'd put a small allocation there," he said.