The first statement by the new Fed chief, Jerome Powell, as well as, at the parliamentary hearings in the American Congress has fully confirmed the previous course taken by the previous leader, Janet Yellen. It was even more contentious than the markets thought it was for the most part.

In Powell's speech, he made it clear that the regulator will follow the course of a smooth increase in interest rates. At first, this caused a new wave of optimism. The local stock market crawled up, the yields of government bonds fell, and the dollar began to surrender. The markets were waiting for this and they were quite happy with this, as the slow rate increase still leaves a temporary gap in purchases of risky assets due to sufficient volume and liquidity that remains low.

But then, Powell made it clear at a hearing before the deputies that against a backdrop of strong wage growth, the approach to unemployment, the Fed may be more active in fighting the prospects overheating the economy. This immediately produced the effect of a cold shower. Markets did not expect a more stringent speech and the yields on US Treasury bonds immediately went up on this wave. The major stock indexes fell and ended the trading session with noticeable shortcomings, and the dollar rose sharply against the major currencies.

Now, as a result of the first and in fact the program speech of Powell, we can say that the Fed will not only continue the old line of Yellen, but also, it is will most likely tighten up its monetary policy, indicating the probability of four increases in interest rates this year. Tn turn, this will support the dollar.

According to the dynamics of the futures on the federal funds, the rose in 87.4%, which indicates an actual expectation of a 0.25% rate hike to 1.75%. Also, the expectations for higher rates in the months ofJune, September and December have increased.

Forecast of the day:

The EUR/USD pair is trading below the level of 1.2260. It can recover to a wave of local overselling. However, if it sustains below it, there is a possibility of continuing its fall initially to the level of 1.2200, and then to 1.2110.

The USD/CAD pair is trading above 1.2725 against the backdrop of the US dollar strengthening, following the speech of Powell in the Congress. The pair may adjust to 1.2725 and if it stays on this mark, oil prices will continue to decline, but we should expect the resumption of growth to the level of 1.2840, and then to 1.2900.