European focus: USD recovers due to technical factors.[M]

Speculations about an excessive USD drop to years lows led to two-days USD recovery against EUR. Market looks for tomorrow FOMC meeting. As expected, the rate will be increased the 16-th time on 25 b.p. up to 5% from current 4.75% (Federal Funds 25 years диаграмма Federal Funds 50 years диаграмма). But the further steps of FED's monetary policy is steel unknown. On 27th April, Ben Bernanke said that "FED can stop on toughening rate policy"/ That fuelled the possibility of the coming rate pause in a 22-month's policy of rate increase after May FOMC meeting.
Yen reached a 6-week high against EUR on Tuesday after the article made a hint on coming rising rate in Japan as early as in July. But JPY has reduced its growth and fell from eight-month peak against dollar as participants of the market began to take profit ahead of FOMC. USD has lost 6% against yen and 4,5% against euro during three weeks because of growing concerns that FED can make a pause of rate increase. "Market is waiting for FED meeting",- said Hideki Hayashi from Shinko Securities. "Traders try to put the currencies on a comfortable levels before the meeting begins". The yen rose as the article in Jiji Press said that the Bank of Japan will raise the estimation of economy, having replaced a word "restored" on "developing" in the nearest monthly report. Such change will be the first since 1991- that predicts coming rate lift, the first time in last 6 years. The report of Bank of Japan showed the land prices increase to 15-years high fuelled the expectations of rate growth. "At present time market has positive sentiment upon JPY",- said Kota Kimura, the forex manager from Shinkin Central Bank. "It will be very difficult to change such sentiment," the analyst added.
Except the FOMC session, this week market focus turns to other important economic indicators, including retails for April (Retail Sales диаграмма Retail Sales (ex. auto) диаграмма), trading balance(US Total Trade Balance ), preliminary May estimation of consumer confidence from University of Michigan (Michigan sent. Index диаграмма). Today March report on Wholesale inventories will be published.