Last week, Citibank’s woes inexplicably pushed the buck higher, but that was not the case yesterday. When Bank of America reported that first-quarter profit fell 77% and credit-loss provisions jumped $4.78 billion, the market decided it was hearing bad news.

Are traders coming to terms with reality? Ashraf Laidi, of CMC Markets US, thinks so.

“Last week’s strong earnings were largely a reflection of relatively robust foreign demand and of the weak U.S. dollar. In the event that equities continue to rally simply on the notion that the ‘worst is behind us,’ they will risk diverging with the stark macroeconomic reality that is highlighted by soaring energy costs and rising unemployment,” Laidi wrote.

For its part, the euro got a boost when European Central Bank Governing Council member Axel Weber said that inflation is likely to remain elevated and hinted that the ECB might have to hike rates.

However, with the euro “so far unable to post new record highs, and the market seen as a bit overextended on the long side of the ledger currently, downside potential may be on the rise in the near term,” wrote currency analysts at Action Economics.