Dollar Index Edges Higher on Increased Tensions Over Ukraine

The U.S. Dollar Index finished higher against a basket of major currencies on Friday, inching up after recent losses, but was down for the week as a series of developments in the Ukraine-Russia crisis put investors on edge.

On Friday, March U.S. Dollar Index futures settled at 96.022, up 0.219 or +0.23%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) closed at $25.73, up $0.08 or +0.29%.

Concerns about a possible Russian invasion of Ukraine also have boosted demand for safe-haven bonds, with Treasury yields dropping on Friday.

On Friday, Russian-backed separatists in eastern Ukraine said they planned to evacuate their breakaway region’s residents to Russia, while U.S. Secretary of State Antony Blinken said the events transpiring in the border area over the past two days are part of a Russian scenario to create false provocations.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 96.430 will signal a resumption of the uptrend. A move through 97.440 will reaffirm the uptrend.  Taking out 94.145 will change the main trend to down.

The minor trend is also up. A move through 95.665 will change the minor trend to down. This will shift momentum to the downside.

The minor range is 95.145 to 96.430. The index is currently trading on the strong side of its 50% level at 95.790, making it support.

The short-term range is 97.440 to 95.145. Its retracement zone at 96.295 to 96.565 is the next resistance target. Its Fibonacci level at 96.565 is also the trigger point for an acceleration to the upside.

The main range is 93.200 to 97.440. Its retracement zone at 95.320 to 94.820 is the best support area.

Short-Term Outlook

Ahead of the long U.S. holiday weekend, traders are focused on what’s happening in Eastern Europe between Russia and Ukraine, and its potential impact on the U.S. Dollar.

Traders are fixated on the safe-haven currencies. If a war breaks out then look for the March U.S. Index to surge with a gap possible and an extension of the rally into 97.440.

If there is a de-escalation then look for the greenback to weaken against a basket of major currencies.