Dollar Defensive Despite Stock Market Rally

he 200-plus point rally in the Dow Jones Industrial Average failed to translate into any significant demand for the dollar, leaving the USD to close in the red against nearly all the G-10 currencies. Sterling was the only exception, giving up 0.45% on Brexit-related pressure now that the UK’s Lower House of parliament has approved the government’s timetable for breaking from the European Union. The upcoming vote weighed on the British unit for the entirety of the European and North American session, preventing cable from gaining any traction above 1.2625.

The other dollar pairs were largely directionless until after the U.S. open. USD/JPY dropped to 113.40 from 114.00 in tandem with lower Treasury yields, breaching the 100-hour moving average. The 200-hour moving average halted the dollar’s fall and contributed to a rebound back towards 114.00. But the rally on Wall Street could not generate a move in the dollar above 114.00. As a result, USD/JPY last traded 0.20% lower at 113.75.

EUR/USD was wedged in between 1.0740 and 1.0765 as Thursday’s European Central Bank meeting stifled trade. Although the ECB is not expected to change monetary policy, there is always the outside chance that ECB president Mario Draghi will spook forex players at the press conference with hints of extending QE. That could result in defensive positioning against the euro during the overnight session which will drive EUR/USD closer to 1.0700. Currently, however, the euro is still holding above this level at 1.0765, giving it a 0.40% gain against the dollar.