US Dollar Index Weakens as 98.200 Support Fails

June U.S. Dollar Index futures are trading lower on Wednesday, pressured by a stronger Euro as traders took a positive view on peace talks in Ukraine. Also weighing on the greenback was a stronger Japanese Yen. The Yen is recovering from a seven-year low amid speculation government and central bank officials were uncomfortable with its recent plunge.

At 12:18 GMT, the June U.S. Dollar Index is trading 97.905, down 0.536 or -0.54%. On Tuesday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $26.32, down $0.17 or -0.64%.

In economic news, the ADP Non-Farm Employment Change report showed the private sector added 455K new jobs in March as expected. This is down from the last month’s 486K reading.

Later today at 12:30 GMT, traders will get the opportunity to react to the latest U.S. Final GDP figures. They are expected to show the economy grew 7.0% last quarter.

The current price action indicates investors are trading off the potential peace in Ukraine that should reduce some of the burden on the Euro Zone economy, making the Euro a more attractive asset. Furthermore, the promise of peace is encouraging investors to change their minds about the dollar’s safe-haven attractiveness.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 97.715 will change the main trend to down. A move through 99.365 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. It turned down on Tuesday when sellers took out 98.420.

The June U.S. Dollar index is also trading on the weak side of a long-term Fibonacci level at 98.200 and a pivot at 98.595, making both levels potential resistance.

If the main trend changes to down then look for the selling to possibly extend into a pair of 50% levels at 97.280 and 96.720.

Daily Swing Chart Technical Forecast

The direction of the June U.S. Dollar index on Wednesday is likely to be determined by trader reaction to the long-term Fibonacci level at 98.200.

Bearish Scenario

A sustained move under 98.200 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to extend into the main bottom at 97.715.

Taking out 97.715 will change the main trend to down. This could trigger a further break into the 50% level at 97.280.

Bullish Scenario

A sustained move over 98.200 will signal the return of sellers. This could trigger a surge into 98.595. Overtaking this level will make 99.365 the next target.