The dollar looks strong on Wednesday and shows strong dynamics through January. The USD index climbed to 2020 highs around 98.20, rising for a fifth day in a row. The greenback is partially supported by safe-haven demand which persists in the markets despite concerns over a China coronavirus have eased. Also, the upside in the US currency is due to the fact that US trade deficit widened less than expected to $66.33 billion last month. On the negative side, wholesale inventories contracted by 0.1% on a monthly basis while pending home sales plunged by 4.9% versus +0.5% expected and +1.2% previously.
Despite the downbeat results, the greenback remains elevated and it looks like it’s ready to extend the rally at least in the near term. Meanwhile, Wall Street’s indexes opened in the green due to positive quarterly earnings. Apple reported stronger-than-expected earnings and rising by about 2.3% after a rally by nearly 3% previously. Boeing stocks are up 2.76% despite weak quarterly results which came as no surprise for investors.
The dollar index managed to hold above the 200-daily moving average and broke above the 98.00 handle, registering fresh yearly highs. As long as the greenback remains above this level, the outlook is bullish. In the near term, further direction in the dollar will depend on the outcome of the Federal Reserve meeting and Powell’s press conference. It will be interesting to see if the central bank’s governor will strike a more upbeat tone on the economy, or will point to downside risks from the recent coronavirus outbreak.
As for the individual pairs, EURUSD refreshed two-month lows below 1.10 and tried to cling to this level. GBPUSD has been losing ground for a fifth day in a row and continues to threaten the recent lows around 1.2960 ahead of the Bank of England meeting due on Thursday. Meanwhile, USDJPY trying to settle above 109.00 following the recent rejection from the 100-daily moving average around 108.70. the pair is nearly flat, struggling for direction amid the remaining uncertainty and heightened volatility.