European focus:the market awaits ECB decision.[E]

The dollar rose versus main currencies and reached a one-month high against yen on speculation USA rate hike.

In a recent days Federal Reserve officials signal increasing concern over inflation that may pave the way for a further interest-rate increase for 17th straight time.

Inflation is ``bothersome,'' and a greater risk than an economic slowdown, Guynn said yesterday in Duluth, Georgia. Earlier Bernanke spoke that inflation hikes are «unwelcome».

Interest-rate futures now priced in 84% a chance of FED rates hike to 5.25% at the nearest FOMC meeting 29 June. Three weeks earlier the similar probability made about 38 %.

Donald Kohn, reporting to Cenat Banking committee of the Executive Board, can leave a bit of light on FED sentiment upon monetary policy. He will speak at 1400GMT

And still, the further USD strengthening can be constrained by expectations оf ECB decision and perhaps in a greater measure, press conference of the ECB President.

There are fears concerning possible ECB rate increases on 25 b.p. that can led to Jean-Claude Trichet hint on further tightening of monetary policy.

As a result the difference between the USA and the EU key rates can be cut that will bring more investments into eurodenominated assets in EUR and will cause bullish sentiment upon EU currency.

Remind that expected reduction of a difference between interest rates became a principal cause of EUR gains from the beginning of year on 8 % against dollar.

Futures traders are betting on a chance ECB will bring its borrowing costs to 3.25% by the end of the year.

The market waits Trichet to be aggressive, says Minoru Shioiri, the CEO of the currency department in Mitsubishi UFJ Securities Co. «If forecasts will approve EUR can get additional support,» analysts believes.