European focus: USD contain it's gains ahead FOMC meeting.[E]

USD remains near local highs versus main currencies. Investors play with vigilance ahead FOMC decision which put a slide light on further market movements.

"The market awaits for hawkish accompanying statement," said Teruhisa Tsuji, trader of Tokyo Mizuho Corporate Bank Ltd."USD remains stable." The market is assured that for a 17th straight time Fed will rise key rate for a quarter percentage point. Interest-rate futures show the market is fully priced the Fed will lift the main rate to 5.25%. The futures indicate an 83% chance of another quarter-point move at an August 8 meeting, that estimated a zero percent odds at the start of the month. Federal Funds 25 years диаграмма

It is possible to assume, that if the Central Bank hint it is open for further rates boost to curb inflation pressure USD can continue retrace on a bases of recent data testifying the largest world economy is strong enough to withstand higher rates. Market players are getting a little bit more bullish on the dollar ahead FOMC meeting,'' said Samarjit Shankar, in Boston Mellon Financial Corp. The Fed may emphasize remaining vigilant on inflation. Interest-rate expectations underpin the dollar." Remind that the U.S. currency has risen 3.4% against the yen and 2.1% versus the euro in June as Fed officials and especially Ben Bernanke emphasized concern on main inflation data growth and hinted on necessity of further rate increase.

Besides we shouldn't dismiss technical factors, thus Hideaki Inoue, the leading manager of derivatives department and bonds investments Tokyo Mitsubishi UFJ Trust and Banking Corp. signals the market is overweight with speculative long euro positions and their closing can lead to rates drop to $1.2400.