The US dollar index edged above the 85.00 level briefly intraday, trading as high as 85.07 after breaking the early January highs at 84.98. The next technical hurdle for the index comes in at 85.23, the 61.8% retracement of the decline from 89.25 in mid-November to the 78.77 lows seen shortly after the Fed adopted its new policy of credit ease.
Risk aversion and narrower interest rate differentials with the euro (which makes up about 60% of the index) have been the drivers to strength in the index in recent sessions. The ECB is expected to cut its refi rate at least 50 bp when the Governing council meets on Thursday.
