Uncertainty Looms as US Dollar Index Wavers Despite Rising Yields

Key Takeaways

• Global market stabilization leads to hopes for avoiding banking crisis
• Maintaining higher rates could lead to US recession
• Traders cautious of banking system disruptions

Overview

On Wednesday, the US dollar struggled to regain strength after experiencing losses over the past two days. Despite rising US Treasury yields, the greenback has had a mixed performance this week

At 05:51 GMT, June US Dollar Index futures are trading 102.245, up 0.139 or +0.14%. On Tuesday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $27.84, down $0.10 or -0.38%.

US Dollar Struggles to Recover as Global Markets Stabilize and Banking Crisis Fears Ease

Global financial markets stabilizing led to hopes that a major banking crisis could be avoided.

The Yen was volatile ahead of the end of the Japanese fiscal year, and the US 10-year benchmark yield reached a one-week peak.

Investors are concerned that maintaining rates at higher levels for a long time could lead the US economy into a recession.

Traders are also cautious of any further disruptions in the banking system.

The short-term outlook for the US dollar index remains uncertain, but new Fed insights and economic data are expected throughout the week.

Daily June US Dollar Index Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through 101.555 will signal a resumption of the downtrend, while a move through 105.490 will change the main trend to up.

The minor range is also down. A trade through 103.025 will change the minor trend to up. This will confirm the shift in momentum.

The main range is 100.345 to 105.490. The index is currently trading on the weak side of its retracement zone at 102.310 to 102.918, making it resistance.

Daily June US Dollar Index Technical Forecast

Trader reaction to the main Fibonacci level at 102.310 is likely to determine the direction of the June US Dollar Index on Wednesday.

Bearish Scenario

A sustained move under 102.310 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into 101.555.

Bullish Scenario

A sustained move over 102.310 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the main 50% level at 102.918.

The minor top at 103.025 is a potential trigger point for an upside breakout.