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With the recent volatility in the forex market, one currency pair seems to stand out: the EUR/USD. This pair has been range-trading for the previous week as the two currencies struggle for dominance of the currency market. With this weekend’s G8 summit on the global financial system, traders will no doubt anticipate a higher level of volatility among this primary currency pair after the world’s economic leaders meet. The Dollar advanced Wednesday against the EUR and JPY after an auction of 10-year U.S. Treasury notes achieved higher than expected yields. Selling off of stocks after the auction intensified the losses among risk-sensitive currencies. The USD fell earlier after Russia’s central bank said it will diversify its currency reserves by cutting U.S. Treasury purchases and buying IMF-backed bonds. The Dollar also fell 6.6% versus the EUR in May on speculation the ever expanding U.S. budget deficit and the Federal Reserve’s increase of the money supply will undermine the greenback. The U.S. budget deficit climbed to $189.7 billion in May, a record for the month which prompted some concerns of the Dollar’s collapse. In light of this, it appears that U.S. fiscal and monetary policy will provide indications on the outlook for the Dollar as markets currently associate an improving economic outlook with a possible tightening of monetary policy. A Federal Reserve survey know as the “Beige Book” which was released Wednesday showed that economic conditions remain weak and even deteriorated in several regions of the country, with commercial real estate and labor markets continuing to struggle. Traders should pay close attention to Core Retail Sales and Unemployment Claims to be released today at 12:30 GMT for further insight in to the state of the U.S economy. The likelihood that the greenback will continue to rise against some of its main currency rivals appears stronger than usual today.