Talking Points:

- EUR/USD[1], spooked by rising Italian yields and credit spreads, continues to trade lower around news of the new Italian government forming. - USD/JPY[2] breakout, aided by higher US Treasury yields, towards 111.48 remains on track - Retail traders[3] are net-short the US Dollar, bolstering the contrarian case for more US Dollar strength. Looking to learn more about how central banks impact FX markets? Check out the DailyFX Trading Guides[4]. US Dollar at Fresh 2018 High, Again The US Dollar (via DXY[5] Index) is extending its winning streak to five consecutive days, seeking to close out each day this week positive. Even with US Treasury yields taking a step backwards this morning, the DXY Index has been able to push to a fresh 2018 high again this week, moving up to its greatest elevation since December 18, 2017. Two pieces of news stick out from the overnight that may be contributing to the shape of price action this morning. First, the Chinese government denied reports that it would introduce efforts to reduce the US' trade deficit by $200 billion. While this seemed outlandish from the get-go, perhaps it is a sign that the conversation is progressing towards resolution - which serves to the US Dollar's benefit.The second item of news on Friday has been the completion of a joint political program by Lega and the Five Star Movement, which effectively outlines the policies that the two populist parties want to strive to achieve. With Italian yields creeping up and credit default swap spreads widening out, it's safe to say that political risk is emerging once again for the Eurozone

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