Aided by gains in the U.S. stock market and higher Treasury yields, the dollar was stronger against most of the major currencies on Tuesday, ending a three-day winning streak for the euro and sterling and gaining as much as 1% against the yen.
Executive orders signed by President Trump on Tuesday aimed at increasing infrastructure spending and oil production drove the S&P 500 and Nasdaq to record highs, and put the Dow Jones Industrial Average back within striking distance of 20,000, restoring confidence in the dollar that was compromised after the inauguration.
The dollar was also bolstered by positive manufacturing data that helped offset a larger-than-expected drop in existing home sales. Both the PMI and Richmond Fed indices were better-than-expected and helped fuel the dollar’s upward trajectory.
And although USD/JPY fell back to 112.85 from 113.30 on the 2.8% drop in home sales, the cross rebounded to take out the 50-hour moving average before settling just below the convergence of the 100- and 200-hour moving averages near 114.09.