Yesterday the US Treasury Secretary testified in front of the Senate's Banking Committee. His remarks affected US stocks which pulled back from the recent highs. Earlier in the week, the equity market perked up in light of the news on a first successful trial of the coronavirus vaccine. Meanwhile, demand for risky assets is also ebbing which triggered downward corrections of both the euro and the sterling against the US dollar.

In his testimony yesterday, Steven Mnuchin spoke in details about a financial aid package under the pandemic conditions. The Treasury Department has already allocated half of $500 billion approved by Congress for lending programs. The rest of the package will be provided for propping up the labor market and those citizens who lost their jobs due to the shutdown of the national economy. Mr. Mnuchin is certain that once the pandemic is over, the domestic economy will exit the crisis being stronger than ever. So, the policymaker is ready for risks which might arise from the Fed's lending mechanism. Moreover, the Treasury Department is aware of losses which might be inflicted on its investment by the Fed's tools.

Another crucial event was a testimony by Fed's Chairman Jerome Powell. He called on the Treasury to provide more financial aid to the economy because the support program for the unemployed matters a lot under the crisis conditions. Apart from it, the Fed's leader gave hope that the Fed's tools would come into force by late May. Nevertheless, the question is still open when the economy will be reopened in full.

As for restarting the economy, yesterday the market found out that almost all states in the US began reopening their businesses in a cautious manner amid lower epidemic rates. This was reported by Vice President Mike Pence. Citing his data, nearly all of 50 states have partially restarted businesses and institutions. The US President greenlighted this move. Notably, Donald Trump insisted on prompt lifting lockdown measures. Nevertheless, the actual responsibility for reopening was shifted to governors.

Concluding his speech, Jerome Powell pledged that the central bank would fine-tune and revise lending tools if necessary. Besides, he promised to consider extra ways of supporting local authorities whose troubles could hinder the overall recovery of the US economy.

Now back to the economic calendar. Yesterday the report on the US construction sector did come as a surprise. So, the number of housing starts in the US tumbled in April as the shutdown stalled the construction activity. According to the US Commerce Department, the number of housing starts contracted sharply by 30.2% on month to 891,000 units. Economists had projected a more moderate decline by 26% to 900,000 units. In a separate report, the number of building permits also plummeted by 20.8% from March to 1.074 million units per year.

The survey from The Retail Economist and Goldman Sachs showed that a retail sales index grew 1.3% on the week from May 10 to 16, whereas the index sank 16.6% in the same period a year ago. Another survey from the Redbook reads that retail sales dropped 9.5% on the same week on a yearly basis.

Here is the technical picture for EUR/USD. Bulls find it difficult to test the level of 1.0980. If the level is broken, the currency pair will rebound to earlier highs of 1.1020 and 1.1140. The downward correction could begin today. If so, the price will slide to the intraday low of 1.0890 with the downward target level of 1.0855. At that low, buyers of risky assets will be trying to form the lower border of the new upward channel which could enable a steady advance of the single currency.