The US Dollar Index has remained fairly strong on the back of last week's worse than expected jobs report. The reemergence of risk aversion has allowed key fibonacci retracement levels (DXY's 61.8% of 78.31-81.35 & EUR/USD's 78.6% of 1.4326-1.3745) to remain intact and has triggered a breach of 10-week trendlines (both DXY & EUR/USD) . The follow-through, however, has been very limited and the 23.6% retracement levels and 35-day EMA's have proven to be significant obstacles. More importantly, the EUR/USD remains entrenched in between two major retracement levels at 1.3737/1.4170 (38.2% & 50% of the entire 2008 range) and is entering a period where volume tends to dry up. In the meantime, the currency markets will take their cue from equity markets (such as the DJIA and S&P 500), which are testing their head & shoulder necklines.
