Forex: US Dollar Index in session highs, around 81.90

The US Dollar Index, which tracks the greenback’s price action against its major rivals, has reverted initial losses to trade back to the positive ground, as results in the Italian elections are spooking investors and fuelling the risk aversion.

Tomorrow and Wednesday, Chief B.Bernanke will testify to the US Congress. Analyst M.Mohi-uddin at UBS commented, “He is likely to claim that America's labour market still needs substantial improvement first before the Fed can stop asset purchases. That may cap the dollar's recent gains for now. Bernanke will also warn on the upcoming fiscal cliff. These automatic spending cuts start from March 1. It's a gentle cliff initially but if subsequent Q2 data shows fiscal tightening is slowing the recovery, the Fed's doves will keep voting for asset purchases well into H2'13”.

At the moment, the index is up 0.23% at 81.88 and according to tradingcentral.com, the next resistance levels align at 81.95, 82.15 and 82.25; while support levels lie at 81.00, 80.80 and 80.70