Seasonal trends make for nice anecdotes and they can be rewarding when properly applied in concert with other, more stringent technical indicators.
With that in mind, it is worth noting that two of 2014’s best currency exchange traded funds – the PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) and the WisdomTree Bloomberg U.S. Dollar Bullish Fund (NYSEArca: USDU) – could start 2015 in fine form because the U.S. dollar historically performs well in January. [Dollar ETFs Could Rise Again 2015]
“As the U.S. dollar is entering its strongest seasonal month of the year, the chart below reflects that it is nearing a 10-year resistance line, as 87% of investors are bullish the U.S. dollar right now,” according to Chris Kimble of Kimble Charting Solutions.
Historical data confirms the bullish January outlook for the greenback. The U.S. Dollar Index, which UUP serves as the tracking ETF for, averaged a January gain of 0.9% over the past 20 years, rising in 60% of those Januarys, according to EquityClock.com. That makes January the best month in terms of average performance for the U.S. Dollar Index and puts the first month of the year into a tie with May in terms of gain frequency.