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Forex: US Dollar index consolidates gains around 83.40/45

FXstreet.com (Barcelona) - The US Dollar Index, which tracks the greenback against its major competitors, is extending its weekly rally on Wednesday, bolstered by the increasing risk aversion stemming from Cyprus and the political instability in Italy.

Greg Gibbs, FX Strategist at RBS comments that USD outflows associated with seasonal factors are now diminishing. “As such, with indicators suggesting that the USD is trading in a generally firmer trend since last year, this trend may be ready to reassert again in the coming weeks. As discussed in recent reports, the tone of US data will be increasingly important now that the Fed is looking to adopt a more variable approach to its pace of asset purchases”, Gibbs concludes.

At the moment, the index is up 0.46% at 83.42 and according to tradincentral.com, the next resistance levels line up at 83.50 and 83.65; on the opposite side, support levels align at 82.90, 82.70 and 82.55

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