The US Dollar Index probed out of a 6-month downward sloping trendline, but failed to follow-through by rejecting at the stubborn 35-day exponential moving average. Ensuing weakness was contained, however, by corrective trendline support originating from the early August lows. Meanwhile, the EUR/USD, which managed to pare overnight losses, rejected once again at the June swing pivot at 1.4338. If these two pivots, DXY trendline support (now at 78.00) & EUR/USD's June swing high, manage to contain expected volatility from Friday's jobs report on a closing basis, then the Greenback should recover through the 35-day EMA towards the psychological 80 handle. This would allow the EUR/USD to break below the supportive 50-day MA towards the August low at 1.4046. An eye should be kept on US Treasury Yields and USD/JPY, as both are severly oversold. A solid US employment report could trigger a rebound in yields and allow the USDJPY to rally back towards the mid-90's.
Our second attempt to capitalize on a recovering Greenback was foiled once again. Generally speaking, stop-losses are trailed to cost once the position has gained nearly 50 pips. Another sell position has been added, this time at the June pivot.
