20.06.201822:41 Forex Analysis & Reviews: Powell predicts a further increase in rates in the US

Data on the growth of the current account deficit in the US balance of payments and the speech of the Chairman of the Federal Reserve Service Powell led to a weakening of the US dollar against the European currency and the British pound, but in general, the technical market picture did not change much in these pairs.

Quotes of oil grew on the background of the opening of the 7th international OPEC seminar.

According to the report of the US Department of Commerce, the current account deficit of the US balance of payments in the first quarter of this year rose to 124.105 billion dollars, while economists expected the figure to be $ 130 billion. Data for the 4th quarter of 2017 were revised downward. According to the report, the current account deficit of the US balance of payments totaled 116.15 billion dollars. The reform of the taxation system, which was adopted in the US earlier this year, partly led to an increase in the deficit. However, more accurate final data, taking into account the consequences of the tax reform, will be presented with a delay of at least one year.

Speech of the Chairman of the Federal Reserve, Jerome Powell, did not lead to the strengthening of the US dollar, even after statements that, despite the uncertainty regarding the level of full employment, the arguments in favor of a gradual rate increase are quite strong. Powell also noted that estimates of the level of full employment are now more uncertain, but restrained inflation expectations and a more skilled workforce led to a decrease in the natural rate of unemployment.

The Fed Chairman also drew attention to the fact that overheating of the economy could lead to risks for financial stability, which is a good argument in favor of a gradual increase in rates.

As for the technical picture of the EUR / USD pair, there have been no significant changes compared to the morning forecast. The buyers of risky assets have a very good chance to regain the advantage. For this, it is necessary to return to the area of resistance 1.1600, where the demolition of a number of stop-orders of sellers will lead to a larger upward trend in euros, with the update of weekly highs in the resistance range 1.1650 and 1.1690. If you get out on 1.1600 does not work, the pressure on the euro will resume with a new force.

As I noted above, oil quotations have slightly strengthened their positions after OPEC Secretary General Barkindo said that reducing OPEC production and countries outside the cartel lays the foundation for the long-term sustainability of the oil market. In his opinion, OPEC should continue to work to create a long-term agreement with oil producers outside the cartel.

It was also suggested that Iran will nevertheless join the joint OPEC agreement in the near future.

As for the conditions for increasing oil production, Saudi Arabia once again began to receive such proposals. Iran and Russia also show some interest in the new oil production deal.