The euro and the pound are enjoying some good old profits so far against the dollar, with EUR/USD opting for important level of 1.3830 and GBP/USD looking ready to break higher above 1.5660. The dollar weakness came on back of risk appetite returning back to the markets. Stocks were up since European open and continued in the same tone towards New York open. Traders are selling the buck and buying stocks in yet another try to make a point that recovery in the global economy may be a reality.

The EUR/USD broke important 1.3670 as we mentioned yesterday, and next target seems to be 1.3830, which is very important resistance. A clear break of the latter level may give euro bulls another try for 1.40 in the coming days. For now, as long as the pair retrace not more than 1.3630, it looks good for further upside.

The GBP/USD is also trading higher and the BOE minutes did not offer any more insight of the UK economy deterioration, hence traders bought the pound in the aftermath. The pair is looking ready for a breakout in the daily and weekly charts and as long as 1.55 holds for now, anything is possible.

The economic calendar had a few releases out of UK, with minutes out of BOE taking the center stage, and the fact that they did not offer anything unpleasant for traders, was taken as a green light to buy the British currency on hopes that the recovery of the UK economy is underway. Today we also have FOMC minutes later on and so far the dollar is losing against all major currencies as traders bet that the outcome of the minutes may bring yet another hopeful message to already battered sentiment that indeed the US economy may start to improve. At times like these where confidence is high, the way is to buy and hope for the best! This is obvious if we have a look at the stocks and also the commodities. The dollar is always the victim of the risk appetite returning and it will be interesting to see how it plays out until the end of the week.

Things to watch for now are EUR/USD and GBP/USD and possible breakouts in store. The crude oil is also appreciating and as long as $60 holds we may see further gains above $65. Speculators are back with a vengeance and clearly want to see higher prices.

One last note, we should always beware of the upside at times of recession and although we should enjoy the ride, risk aversion should be in the back of our minds. We need to see rallies sustain for more than a week or two in order to say that something bigger is coming.