US Dollar Index: Strong Over 98.595, Weak Under 98.200

The U.S. Dollar is trading slightly better at the mid-session on Wednesday as investors monitored U.S. President Joe Biden’s first foreign trip since the war in Ukraine began on February 24. Investors are also dealing with a surge in crude oil prices, while continuing to assess hawkish remarks from Federal Reserve Chair Jerome Powell.

At 17:15 GMT, June U.S. Dollar Index futures are trading 98.650, up 0.127 or +0.13%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) is at $26.38, up $0.04 or +0.15%.

The greenback is firm against the major currencies including the Euro as oil prices saw a more than 4% jump. Meanwhile, Biden is poised to announce, alongside other European leaders, new sanctions against Russia during his trip to Europe.

Higher yields continue to underpin the U.S. Dollar with the benchmark 10-year Treasury note rising to more than 2.4%. Federal Reserve Chair Jerome Powell helped fuel this recent surge in yields on Monday when he raised the possibility of raising interest rates by more than 25 basis points at upcoming meetings, a more aggressive stance echoed by other policymakers.

In related news, analysts at Jefferies on Wednesday updated its Fed forecast in light of Powell’s comments and now sees a 50 basis point hike at both the May and June meetings, followed by 25 basis point hikes at the remaining meetings of 2022.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 99.300 will change the main trend to up, while taking out 99.470 will reaffirm the uptrend. A move through 97.715 will reaffirm the current downtrend.

The minor range is 99.470 to 97.785. The index is currently straddling its pivot at 98.595.

The major support is the long-term Fibonacci level at 98.200.

Daily Swing Chart Technical Forecast

The direction of the June U.S. Dollar Index into the close on Wednesday is likely to be determined by trader reaction to 98.595.

Bullish Scenario

A sustained move over 98.595 will indicate the presence of buyers. Taking out the intraday high at 98.895 will indicate the buying is getting stronger. If this creates enough upside momentum then look for the rally to possibly extend into the main tops at 99.300 and 99.470.

Buyers are going to have to clear 99.300 in order to verify the change in trend, and possibly trigger an acceleration to the upside.

Bearish Scenario

A sustained move under 98.590 will signal the presence of sellers. This could trigger a fast break into the Fibonacci level at 98.200. Trading below this level will put the index in a position to challenge the main bottom at 97.715.