As per the Retail sales report, American shoppers in May showed a record 17.7% monthly gain in retail spending after devastating declines in the previous months due to the corona virus lockdowns. The recovery was only partially made up for the losses till now as spending were down about 6% year-on-year. And some sectors, such as clothing stores have seen far steeper declines. But the rebound of retail sales data was much more than expectation which boosted hopes of a V-shaped recovery.

Last month, US employers also added a surprise 2.5 million jobs and the unemployment rate fell to 13.3%. Capital Economics said it now expects the US economy to contract at an annual rate of 30% in the three months to July, compared to its previous more than 40% estimate.

President Donald Trump tweeting that it “looks like a BIG DAY FOR THE STOCK MARKET AND JOBS!” supported the safe haven assest.

Powell again emphasised policy will remain ultra-loose with the potential that they could have to do more to ensure the recovery continues. Chairman Powell’s semi-annual monetary policy testimony to the Senate reinforces the view that while the Fed is encouraged about the recent data flow as the economy re-opens, we are a long way from “normality” and that won’t arrive there is the confidence we have overcome Covid-19.

In this regard he again placed great emphasis on inequality, pointing out that “those least able to withstand the downturn have been affected most” with minorities, women, and low-income households disproportionately carrying the burden of the economic hardship.

Federal Reserve also gave hope with saying that it will use full range of tools to support the economy and to help assure that the recovery from this difficult period will be as robust as possible.

EUR/USD 4 Hours Chart:

Support: 1.1210 (S1), 1.1156 (S2), 1.1084 (S3).

Resistance: 1.1335 (R1), 1.1406 (R2), 1.1460 (R3).

Amid the prevailing hopes of recovery and Retail Sales data and Federal Powell boosting the strength of USD, we expect a bearish trend for EUR/USD.