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On Thursday morning, the US Dollar staged a modest rally and hit new yearly highs in the 99.00 region. Wednesday’s strong close in the US stocks supported the DXY and helped it to multiply its gains. However, the news from Hubei province weighed heavily on the risk-on sentiment and weakened the USD as well as the risk assets while the safe-haven yen and gold took advantage of the situation.

In the morning, after the reassessment of the diagnosis results, Hubei health commission decided to add the number of clinically diagnosed patients to the total number of infected people and thus reported 14,840 news cases for today. The death toll climbed to 1,310 (242 new victims). These estimates spooked markets and weakened Asian equities, US futures and Treasury yields.

In response to the news, the AUDUSD pair dropped to 0.6708 lows, NZDUSD followed suit and fell to the 0.6440 region while USDJPY breached the psychological 110.00 mark and continued its march south amid the rising buying interest for the Japanese yen. As for the European currencies, the EURUSD pair traded near 33-month lows in the 1.1870 region marked on Wednesday while GBPUSD was seen in the 1.2950 area.       

The dollar index edged lower to 98.82 and continues to lose traction – investors haven’t yet digested fresh news from Hubei, and coronavirus concerns pervaded markets again. Risky assets suffer and keep on sitting in the red while the Cable witnessed a modest rebound to the 1.2975 region on the back of the USD weakness. However, the shared currency seems helpless and continues to hang near its multi-month troughs.

Later today, in the NA docket the US will release the CPI report. The strong numbers may brush away coronavirus fears and support the DXY while weak readings will probably weigh on the US Dollar. However, whatever the figures are, the EURUSD pair is likely to maintain its bearish trend while it trades below its SMA200 H1.

From the technical point of view, the DXY relevant resistance awaits at 98.80, 99.05 and 99.37 while the support is at 98.54 followed by 98.06 and 97.75.

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