Risk appetite has seen a sharp revival this week; and the swell has had a clear, detrimental impact on the US dollar. However, this pickup in sentiment is likely to crest soon. The question Forex traders should be asking is whether the greenback will be ready to take the reins should investment optimism once again levels off. To answer this question, we must first understand the source of the recent bullish drive. There have been minor improvements in various economic indicators and forecasts for some weeks (including the projections from the G8 summit last week); yet these indicators have hardly raised prospects to an impending push into positive growth. Instead, market participants are likely finding their buoyancy from the start of 2Q corporate earnings season. So far, Blue chips like Johnson & Johnson, Intel and Goldman Sachs have supported signs of a broader recovery. However, this rise in revenue isn’t surprising – especially with government aid still in place. When blatant risk appetite finally settles, currencies will once again be pitted against each other for economic and financial stability. With the upgrade in growth forecasts from the FOMC today and IMF last week, the market will have to weigh economic recovery against fiscal deficits for guidance.