The USD index could target the 98.00 figure if the buying pressure persists in the near term

The dollar is back on the offensive these days as risk aversion has intensified again amid the ongoing tensions surrounding Ukraine and a new round of Western sanctions against Russia. Wall Street stocks finished lower overnight, pushing Asian markets south as well. In Europe, equities mostly fell at the open on Wednesday, with investors staying cautious. 

According to the latest reports, the next round of Russia-Ukraine talks may take place at the end of this week after the first round on Monday didn’t lead to anything significant. Meanwhile, Ukraine’s President Zelenskyy said “Russia can’t win Ukraine with bombs, strikes, and rockets.” 

As such, the US dollar continues to attract safe-haven bids amid looming Russia-Ukraine risks. The USD index is now back at May 2020 highs around 97.75 and could target the 98.00 figure if the buying pressure persists in the near term. 

Against this backdrop, EURUSD plunged below the 1.1100 figure and extended losses to 1.1065 during the European trading hours. the common currency is also under pressure as traders pare back ECB rate hike bets. Furthermore, European assets are being hit amid the sanctions against Russia. Meanwhile, USDRUB rallied to fresh all-time highs above the 117.00 figure before correcting towards the 113.00 level in recent trading.  

Later in the day, the ADP employment report could add to the dollar’s bullishness if the figures exceed expectations ahead of Friday’s key US jobs report. However, geopolitics will continue to stay in the market focus for the time being. In case of a downside correction, the USD index will first target the 97.50 immediate support zone, followed by the 97.30 region. Despite the potential profit-taking, the overall bullish trend will stay intact.  


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