The dollar has started the week on a stronger note, despite panicked new worries concerning a possible 'swine flu' outbreak in Mexico, however the stocks were down since early on in the European opening and continued to do so after New York's opening. Investors are buying the greenback and the yen once again, as risk aversion comes back to haunt them at every turn.

The EUR/USD did not manage to break 1.3230, as the pair found a temporary halt. After the impressive rally we saw last week, traders are not sure that the upside can sustain itself for long, as further fears of slowing in the Euro zone's economic recovery is in the back of traders€™ minds. The failure of the pair to break higher above 1.32 may indicate it will see further downside towards 1.30 in the coming days, if the European sentiment continues to be negative.

The economic calendar was almost empty today, with news headlines about the flu in Mexico being the main driver for markets across the globe. Last week€™s rally has been contained and traders want to see how the flu news will play out. Risk aversion always returns in current fragile market environments and that could be spotted in gold€™s direction which seems to rise recently on the back of investors need for safe haven assets

This week does have some important economic events, notably the FOMC meeting where Bernanke will give us more insight as to their plans The forecasts show the rates as staying put for now, however it will be interesting to see if the statement afterwards will changed to a more optimistic outlook. Bernanke himself said that the country is on the road to recovery, but that is yet to be determined with the next load of economic data next week. Also we have GDP numbers out later this week and more earning reports from banks and corporations which will be monitored from market participants in order to know if indeed the bottom in the current crisis may surface anytime soon.

The main thing to watch is how the dollar will perform this week, and if the risk aversion will finally drive the US currency into further strength; EUR/USD needs to keep 1.30 level for now, if more upside is to be seen. However a clear break may give the dollar bulls the upper hand and make the euro weak again. It seems like markets are stalling lately and there is no particular catalyst for traders to commit either way. The need for investors to believe that things can finally stabilize is stronger than it seems and the constant battle between risk appetite and risk aversion is the proof of that. So far, risk aversion always prevails and until we see better economic numbers getting released on a more permanent basis, traders will continue to seek safe haven assets.