US stocks set to bounce back, dollar in focus

U.S. stock index futures pointed to a higher open on Wednesday, following Europe into positive territory and shrugging off Tuesday's weak close and a surge in the U.S. dollar.

Dollar strength and bond yields, in the context of Federal Reserve tightening, will likely continue to dominate market movements on Wednesday.

Read MoreDollar and bond yields to dominate trading

Traders work on the floor of the New York Stock Exchange.
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Traders work on the floor of the New York Stock Exchange.

The dollar rose 1.3 percent on Tuesday, up 2.6 percent month to date, as stronger U.S. data and indications of an interest rate hike boosted the greenback against major world currencies.

The dollar reached its highest level against the yen since July 2007, while the euro fell below $1.09 for the first time since April 28 Tuesday and continued to trade below $1.09 on Wednesday.

The U.S. 10-year Treasury yield traded near 2.15, up slightly from 2.14 percent in late trading Tuesday.

No major data is expected Wednesday. Weekly mortgage applications dropped 1.6 percent as higher rates put a pause on refinancing.

The main policy event will arguably be Treasury Secretary Lew's attendance at the G7 meeting of finance ministers in Dresden.

Earnings expected on Wednesday include Michael Kors, Costco, Tiffany, Toll Brothers, Chico's FAS, MOL Global all due before market open.

Tiffany earned 81 cents per share for its latest quarter, 11 cents above estimates, and revenue was also well above forecasts despite the negative effects of a strong dollar. The results follow a downbeat forecast given by Tiffany earlier this year.

Michael Kors fell one cent shy of estimates with quarterly profit of 90 cents per share, with revenue essentially in line. The company, however, reported its slowest sales growth in 3-1/2 years, and its full-year forecast, however, is below Street estimates.

Toll Brothers earned 37 cents per share for its latest quarter, two cents above estimates. The luxury home builder did see revenue come in below estimates as the number of homes sold fell two percent.

DSW reported quarterly profit of 53 cents per share, six cents above estimates, and revenue also was above analyst forecasts. The company's results were led by a jump in athletic footwear sales, though it did see growth in all its major categories.

Read MoreEarly movers: TIF, KORS, TOL, BWS, HRL, AMZN & more

European stock markets traded higher Wednesday despite concerns over Greece's deteriorating financial situation.

Elsewhere, Aer Lingus shares were up 2 percent after the Irish government agreed to sell its 25 percent stake in the airline to IAG, the owner of British Airways.U.S. stocks sold off more than 1 percent on Tuesday, under pressure from strength in the dollar and better housing data that renewed anxiety over imminent central bank tightening.

U.S. Federal Reserve Vice Chairman Stanley Fischer said Tuesday that markets should not be surprised by the timing or pace of rate hikes.

CNBC's Peter Schacknow contributed to this report.