The US Dollar Index has fallen to a fresh 10-month low as risk appetite continues to flourish. Last week's rejection at a key fibonacci retracement and the 20-day moving average hinted that the brief recovery was about to end. The Cable's (GBP/USD) subsequent ascending triangle breakout triggered further losses, causing the Greenback to fall back towards the once hopeful double bottom base. Monday's follow-through has been tempered by demand near the December 2008 spike low. The obvious support at 77.64 could allow for a pullback back towards last week's base at 78.22/30, which would present a good opportunity to short. A capitulation-type move could be at play towards 75.00/76.00 (near 78.6% retrace/Q3 2008 base) until the 10-day MA is broken to the upside.
The EUR/USD found support at a key fibonacci retracement and the 50-day MA last week to establish a fresh 2009 high on Monday. The brief relapse tested the top-end of last week's 1.40-1.42 range. The ensuing rally to 1.4444 has validated the symmetrical relation to the previous 400 pip range and represents a 61.8% extension. The 78.6% proportion comes in at 1.4514 and the equality range target or 100% proportion is 1.46. This level is also the 61.8% retracement pivot of the 2008 high & lows and should provide decent resistance since both the 38.2% and 50% levels acted as very relevant pivots. A pullback to the 1.4289 region would be the third test of a two-month internal trendline and would be an attractive long entry point. Meanwhile, the medium-term bullish structure remains intact while this pair trades above key weekly RSI pivots and the 50-day MA.
