The Chair of the Federal Reserve Jerome Powell testified before the Financial Services Committee at the U.S. House of Representatives, along with Treasury Secretary and former Fed Chair Janet Yellen. They commented on the performance of the CARES (Coronavirus Aid, Relief, and Economic Security) Act.
Powell spoke on the role of the Federal Reserve in cushioning the coronavirus fallout, noting 'the one-year anniversary of the CARES Act'. Powell observed that 'the recovery has progressed more quickly than generally expected and looks to be strengthening'.
FED's number one expounded upon the overall progress that has been made in offsetting the impact of the pandemic on the underlying economic activity, and the strained financial systems. He also delineated on the persistently muted parts of the general recovery, notably the subdued retail demand.
" When financial markets came under intense pressure last year, we took broad and forceful actions, deploying both our conventional and emergency lending tools to more directly support the flow of credit. […] Indicators of economic activity and employment have turned up recently. Household spending on goods has risen notably so far this year, although spending on services remains low, especially in sectors that typically require in-person gatherings. "
Powell's comments strengthened the recuperating dollar. As can be seen on the 4H chart below, the EURUSD continues to depreciate in the short-term. The price action broke down below the Pennant's lower boundary, which represents a substantial indication for the likely continuation of the downtrend.
Moreover, the price action continues to be trading below the two moving averages - the 50-day MA (in green) and the 100-day MA (in blue) - while the MACD indicator recently underpinned another bearish crossover.