Forex. Tuesday results [E]

Tuesday EU trade flew a little nervous. At first the yen climbed from a three-month low against the dollar on speculation the fastest economic growth in China will have a positive impact on Japanese export.
But later issued report testified Germany's ZEW index of institutional and analyst expectations fell to the lowest since May prior year. Remind that index showed lower figures every month since it reached a two-year high in January.
The report bolstered concern that ECB higher borrowing costs are hurting economy growth in region.
The separate report signaled U.K. house prices rose in June by the most in more than two years for April-June 2006 as Royal Institution of Chartered Surveyors (RICS) informed. RICS pointed average house prices in April-June lifted to +28 from +20. The measure, adjusted for seasonal swings, was the highest since May 2004 when data testified +41 elevation caused by BOE
anxiety. That time the UK Central bank boosted rates to stood real estate market.
In the second half of trades the dollar corrected morning upside pace and reached 2-month high against the euro after the government report. It testified overseas investors’ purchases of U.S. assets in May beat analysts’ forecasts. Besides, bonds gain is good for USD prospects, said market players.
Before the bell Labor Department highlighted PPI growth exceeded forecasts and made 0.5% against gain 0.2% in May. Core PPI isn’t pricing prices change for food and energy. As expected, it rose 0.2% m/m and 1.9% y/y.
As a result renewed speculations on coming Fed rate gain and USD climbed to important technical levels. Its overcoming will strengthen bullish sentiments on dollar.

EUR/USD after consolidation in a range $1.2520/40 fell to $1.2490/00. Bids, placed here caused recoil to $1.2550. Then drop proceeded and rate tested support $1.2470/80. After that rebound wasn’t so big and day closed on $1.2505.
GBP/USD after consolidation in narrow range $1.8190/1.8210 rate rose. As a result rate reached resistance area $1.8300/10. It didn’t overcome this area and the rate stabilized near $1.8260/90, where it closed trades.
USD/JPY declined to Y116.70 during trades, however, rate came to Y117.10 later. After consolidation in a range Y116.90/117.05 rate gained to Y117.50/60. Strong recoil didn’t follow and trades closed on Y117.28.

Uncertainty on expectations Fed Chairman Ben Bernanke tomorrow speech in Congress and important inflation report can cause slump of market activity and insist on some investors to close long positions on dollar ahead important speech. It allows to predict USD drop.