Level 1,2900 is historically and psychologically quite strong resistance line. From this level traders expected correction of uptrend at profit-taking by euro bulls.
Dollar has also become stronger on expectations of the further rate increase. Despite mood concerning easing of FRS monetary policy, prevailing at the beginning of month. However on Friday some Board members declared that FRS would not stop at 5 % rate and at the nearest FOMC meeting the rate would be raised minimally by 25 points.
The inflationary risks connected with a rise in energy prices begin to prevail, the confident rates of growth of production and growth of a labor market do not raise the doubts yet.
Dollar also got support after players began to dump Yen.
The yen decreased 1 % against dollar after Bank of Japan Executive Toshikhiko Fukui told that the Bank does not hurry up with the rate increase. The dollar returned to itself a part of its positions after decrease of 8 % against yen and 7 % to euro since the middle of April on fears that FRS will make a pause in the rate increase. "The dollar has grown today partly because of yen - the market waits that increase of the rate will begin in the third quarter", - Tom Vossa at National Australia Bank told.
Euro hike against dollar causes more and more anxiety of Europeans.
Austrian National Bank Executive Klaus Libsher told that the European central bank is concerned by forecasts of inflationary risks in Eurozone. "There are no serious secondary effects of inflation from a rise in oil prices earlier, owing to the moderate wage-push", - Libsher, ECB Governing Council member told.
"Still there are fears about forecasts of growing inflation", - he has added. "The last updatings of monetary policy guaranteed that there would not be risks of price stability in the intermediate term period". "On a background of growth of expectations that ECB will increase the rate next month Libsher said, "the vigilant monetary policy is a necessary term for dynamical economic growth and employment".
He pointed out occurrence of "signs of strengthening and expansion" of economic growth in Eurozone. "At the same time historically low interest rates and great profits of corporations create a favorable investment climate as some indicators of a business climate of Bank of Belgium confirm, - Libsher noted. - And certainly there are signs that we gradually reach potential rise".
Next weeks the whole series of significant news is expected. Key event of week will be the GDP report in 1 quarter of 2006 in the USA, the report will reflect the refined preliminary data.
Gross Domestic Product (GDP) is the most important criterion of economic activity. Data are issued every quarter. And quarterly reports are published three times in each next month. First two are preliminary values and the third is a final value. GDP calculation includes data on consumption, investment volume, net-export, the governmental purchases, inventories. In addition to it Chain Deflator, which adjusts accounting price, proceeding from inflation, is included.
The market, as a rule, watches this market indicator very closely. Positive GDP data in the USA always influence positively on the dollar.
The market expects increase of a preliminary GDP indicator, which in April was up 1,0 % to 5,8 %.
While forces in the market are approximately equal. It is necessary to expect the further fundamental parameters and to remain outside the market.
