Romeo refers to himself as fortune's fool because his love and marriage to Juliet have filled his head so much that he does not pay full attention when he encounters Tybalt in the street. He is full of bliss for his great fortune and wants to stop the fight, but Tybalt is of no such mind.
When Mercutio is killed by Tybalt at a moment that takes Romeo by surprise he admits that his love for Juliet has made him soft.
Rom."This gentleman, the prince's near ally,
My very friend, hath got his mortal hurt
In my behalf; my reputation stain'd
With Tybalt's slander, Tybalt, that an hour
Hath been my kinsman. O sweet Juliet!
Thy beauty hath made me effeminate,
And in my temper soften'd valour's steel!" (Act III, Scene I)