The EUR/USD and the 2-year yield spread between the EU and US have traded in lock-step. The 2-year spread, which has continued to widen in the EU's favor has cleared a 61.8% retracement while the EUR/USD continues to hover around it's key Fibonacci level. Due to the strong correlation, this portends further strength for the EUR/USD. In the meantime, a 4-hour engulfment pattern was negated for the DXY & EUR/USD earlier. Now a potential 6-hour bullish engulfment pattern is developing. Confirmation requires a 1800GMT close above DXY77.097 and follow-through into today's close.
