Dollar strength and bond yields, in the context of Federal Reserve tightening, will continue to dominate market movements on Wednesday.
"We had the market in a tight trading range, but now you see the market fixating on comments out of (Fed Chair Janet) Yellen and fixating on Europe," said Quincy Krosby, market strategist at Prudential Financial. "When the market wants to move higher it will. … We'll be following the dollar. That will be important to see whether or not it gains momentum."
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.