• DXY struggles to extend the previous day’s heavy gains as markets turn cautious ahead of the key events.
• US President Biden may exert more pressure on Russian counterpart Putin in the first SOTU.
• Upbeat US data, inflation expectations also keep greenback buyers hopeful.
• Fed Chair Powell’s testimony, ADP Employment Change will also entertain traders.

US Dollar Index (DXY) seesaws around 97.25-20 as market players await US President Joe Biden’s first State of the Union (SOTU) during Wednesday’s Asian session.

The greenback gauge rallied the previous day as risk appetite worsened on Russia-Ukraine headlines.

Moscow intensified its military invasion of Kyiv despite the Western sanctions. The same pushed global entities, not just the West, to take punitive measures against Russia. At the latest, the International Monetary Fund (IMF) and World Bank (WB) mentioned, “War in Ukraine creating significant spillover effects in other countries, commodity prices rising, risk driving further fueling inflation.”

On the same line, US Treasury Secretary Janet Yellen also said, “The G7 continues to support the removal of key Russian financial companies from SWIFT. Additionally, prepared remarks for US President Joe Biden’s State of the Union (SOTU) speech also signaled that Biden emphasized self-reliance to tame inflation while also criticizing the Russian invasion of Ukraine.

Read: US President Biden to say his plan to fight inflation will lower costs, deficit – Reuters

It’s worth mentioning that the Moscow-Kyiv peace talks aren’t off the table and hence keep the market players hopeful of a solution amid the latest pressure on Russia.

The same might have helped the US 10-year Treasury yields to pare back Tuesday’s losses around 1.75%, up four basis points (bps). Also portraying cautious optimism in the market is the S&P 500 Futures, up 0.33% intraday by the press time.

Other than the risk catalysts, DXY bulls also cheered upbeat prints of the US ISM Manufacturing PMI, 58.6 versus 58.0 expected, and the firmer US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data.

Moving on, US President Joe Biden’s State of the Union (SOTU) and Fed Chair Jerome Powell’s bi-annual testimony will be crucial for market players to watch. Also important will be the US ADP Employment Change for February, the early signal for Friday’s NFP.

Read: US ADP February Preview: Private job creation returns

Technical analysis

Unless declining back below a three-week-old support line, around 96.25 by the press time, US Dollar Index remains directed towards an upward sloping resistance line from late November, near 97.75 at the latest.