ECB 11day rate hike seen as highly likely, continued pressure for dollar strength

This week (8~12day), the dollar is attempting to strengthen further in the New York foreign exchange market. Market participants are watching the possibility of future interest-rate moves by the U.S. Federal Reserve. Movements in the dollar are cited as a factor influencing global capital flows. The conclusion of a peace agreement between the United States and Iran remains uncertain. The U.S. economy continues to show a relatively strong trend compared with other major economies. This is cited as the background maintaining pressure for dollar strength. The European Central Bank (ECB) is considered almost certain to raise rates at its monetary policy meeting in 6 month 11day, for the first time in approximately 3 years. The possibility of an ECB rate hike has prompted expectations that it could put upward pressure on the euro. However, the size and continuity of the hike need to be confirmed. Market assessments say it remains uncertain whether the ECB's hawkish stance will actually translate into euro strength. With expectations of additional rate hikes by the Federal Reserve having strengthened, the ECB's effect may be limited. Analysis has emerged that this supports the dollar's further attempts to strengthen. Overall, this week, central bank decisions, U.S. economic indicators, and geopolitical variables are increasing exchange-rate volatility. Exchange-rate fluctuations directly affect importers and exporters and companies settling payments in foreign currencies. Investors need to check the market response when related announcements are made.