The US Dollar Index has suffered due to renewed strength in risk appetite. The rejection below 79.18 (key fibonacci retracement) and the inability to clear a 4-hourly mid-Bollinger band have kept the bearish structure intact. The follow-through, however, has been limited. In fact, subsequent price-action is threatening to form a 2-day double bottom and if confirmed could strengthen the case for building a larger (6-week) double bottom base. Moreover, several charts indicate that risk appetite may be exhausting the recent run-up, which would help to alleviate pressure on the Greenback. The EUR/USD rebounded off its recent range high at 1.4160/70 for the second time in as many days, a third test carries a strong probability of a significant break to the downside. If the EUR/USD fails to breach 1.4160 (and the DXY fails to reclaim 79.18), then a retest of the June high becomes increasingly likely.
