US Dollar Forecast: Safe-haven funds will flow back, and the US Dollar Index will target the key breakout level of 97.522.
2026-02-19 00:32:38
On Wednesday (February 18), the US dollar index rose, basically recovering from the sharp fluctuations of the previous day, and is approaching the key pivot point and potential breakout level of 97.522.
The dollar strengthened in early trading, driven by multiple factors: rising 10-year Treasury yields, a weaker euro, and position adjustments ahead of the release of the latest Federal Reserve meeting minutes later today.
In addition, CNBC reported that Vice President JD Vance stated that Iran failed to meet U.S. red lines in this week's nuclear negotiations, and that President Trump reserves the right to use military force, a statement that also triggered safe-haven buying.
U.S. Treasury yields held steady, but the Fed meeting minutes are expected to offer no new insights.
The yield on the benchmark 10-year U.S. Treasury note held steady on Wednesday as traders attempted to recover some of the losses from last week's sharp decline.
However, uncertainty ahead of the release of the Federal Reserve meeting minutes may limit the rise in yields.
The Federal Reserve adopted a neutral stance at its last meeting, and the employment and consumer inflation data released last week sent mixed signals. Therefore, the minutes are unlikely to release any new signals, and the market is currently focused on the updated data.
The CME FedWatch Tool shows that there is a 92% probability that the Federal Reserve will keep interest rates unchanged at its March meeting, and only a 50% probability that it will cut rates in June.
Therefore, even though stable yields provided support for the dollar today, it was not the main reason for the dollar's strength in the early morning.
Lagarde's departure news weighed on the euro, providing early support for the dollar.
Reports that European Central Bank President Christine Lagarde plans to step down early sent the euro down on Wednesday, which may be one of the reasons for the dollar's strength in early trading.
The euro accounts for about 57% of the dollar index, and a weaker euro is generally beneficial to the dollar.
Technical Analysis
(US Dollar Index Daily Chart Source: FX678)
The US dollar index rose further after the news broke, reaching the resistance level of 97.522, mainly driven by Vance's related comments.
This is typical safe-haven buying, meaning that if the US-Iran situation escalates further, the US dollar index is expected to enter the key retracement range of 97.522-97.987, and may even break through the previous high of 97.973.
If a breakout occurs, the US dollar index will challenge the 50-day moving average of 98.004 and the 200-day moving average of 98.456.
The support level is located in the retracement range of 96.762 to 96.476.
Key question: Will today's news trigger an upward breakout?
Looking ahead, will the current positive news be enough to push the US dollar to break through its recent highs and moving average resistance?
If the answer is yes, it means the dollar trend may be reversing.
If the Fed minutes release hawkish signals, suggesting that the first rate cut in 2026 may occur after June, this logic will be validated.
Currently, the market's expectation for a rate cut in June is only 50%, and this scenario is possible.
At 00:30 Beijing time, the US dollar index was at 97.4710/4840, up 0.39%.
The dollar strengthened in early trading, driven by multiple factors: rising 10-year Treasury yields, a weaker euro, and position adjustments ahead of the release of the latest Federal Reserve meeting minutes later today.
In addition, CNBC reported that Vice President JD Vance stated that Iran failed to meet U.S. red lines in this week's nuclear negotiations, and that President Trump reserves the right to use military force, a statement that also triggered safe-haven buying.
U.S. Treasury yields held steady, but the Fed meeting minutes are expected to offer no new insights.
The yield on the benchmark 10-year U.S. Treasury note held steady on Wednesday as traders attempted to recover some of the losses from last week's sharp decline.
However, uncertainty ahead of the release of the Federal Reserve meeting minutes may limit the rise in yields.
The Federal Reserve adopted a neutral stance at its last meeting, and the employment and consumer inflation data released last week sent mixed signals. Therefore, the minutes are unlikely to release any new signals, and the market is currently focused on the updated data.
The CME FedWatch Tool shows that there is a 92% probability that the Federal Reserve will keep interest rates unchanged at its March meeting, and only a 50% probability that it will cut rates in June.
Therefore, even though stable yields provided support for the dollar today, it was not the main reason for the dollar's strength in the early morning.
Lagarde's departure news weighed on the euro, providing early support for the dollar.
Reports that European Central Bank President Christine Lagarde plans to step down early sent the euro down on Wednesday, which may be one of the reasons for the dollar's strength in early trading.
The euro accounts for about 57% of the dollar index, and a weaker euro is generally beneficial to the dollar.
Technical Analysis
(US Dollar Index Daily Chart Source: FX678)
The US dollar index rose further after the news broke, reaching the resistance level of 97.522, mainly driven by Vance's related comments.
This is typical safe-haven buying, meaning that if the US-Iran situation escalates further, the US dollar index is expected to enter the key retracement range of 97.522-97.987, and may even break through the previous high of 97.973.
If a breakout occurs, the US dollar index will challenge the 50-day moving average of 98.004 and the 200-day moving average of 98.456.
The support level is located in the retracement range of 96.762 to 96.476.
Key question: Will today's news trigger an upward breakout?
Looking ahead, will the current positive news be enough to push the US dollar to break through its recent highs and moving average resistance?
If the answer is yes, it means the dollar trend may be reversing.
If the Fed minutes release hawkish signals, suggesting that the first rate cut in 2026 may occur after June, this logic will be validated.
Currently, the market's expectation for a rate cut in June is only 50%, and this scenario is possible.
At 00:30 Beijing time, the US dollar index was at 97.4710/4840, up 0.39%.
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- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
