22.05.202010:31 Forex Analysis & Reviews: EUR/USD: Bears overpowered the bulls. The demand for the euro decreased amid new measures to help the US economy. China is trying to distract the White House from investigating the origin of the coronavirus.

The US dollar rose against the euro and the pound, due to good statistics on business activity in the US. In addition, the statements of US President Donald Trump on supporting another package of assistance to the US economy increased the demand for the currency.

Yesterday, China announced its readiness to implement the first phase of its trade deal with the United States, which was signed earlier this year. A report by China's Premier Li Keqiang revealed that after overcoming the coronavirus pandemic, China intends to return to joint work with the US, hinting as well that Beijing is ready to take new steps related to strengthening trade and economic cooperation, most likely talking about the second phase of the agreement.

Such statements will help smooth out the tension that is now brewing between the two countries. Earlier, the United States is actively accusing China of implementing incorrect policies in the fight against the coronavirus, which can lead to serious economic consequences. The US plans to impose sanctions against the country, especially if China's guilt for the spread and outbreak of COVID-19 is fully proved.

With regards to economic support, the US president said in an interview yesterday that he is ready to support new measures that will help the US economy avoid severe shocks. Just last Wednesday, a meeting was held in the White House between Senate Majority Leader Mitch McConnell and US President Donald Trump, during which issues related to new assistance measures that should not exceed $ 1 trillion were discussed. The main emphasis was placed on creating new funds that will help Americans without financing the debts of US companies and enterprises. Such is most likely a part of a political step and a kind of response to the measures that Democrats recently proposed.

Meanwhile, the situation in the US labor market continues to gradually stabilize. According to the report of the US Department of Labor, the number of Americans first applying for unemployment benefits last week was 2.4 million, lower than the figure recorded the week before. However, the data did not include those who received temporary assistance under the state program, which was introduced due to the coronavirus.

The decline in business activity in the US private sector is gradually slowing. This is directly due to the mitigation of quarantine measures in various states across the country. According to the report published by IHS Markit, the preliminary PMI in May this year turned out to 36.4 points, higher than the 27.0 points recorded last April. This means that activity in May, although low, is still much higher than the activity recorded in April. A lesser decrease in activity was observed both in the manufacturing sector and in the services sector.

The decline in the secondary housing market also did not surprise traders. Many already expected such indicators due to the restrictive and isolation measures that were introduced in April this year. According to the report of the National Association of Realtors, sales in the secondary housing market fell by 17.8% in April, amounting to 4.33 million, lower than economists forecast of 19.5%.

Meanwhile, the data on manufacturing activity in the area of Philadelphia Fed please traders a little, due to the slight increase recorded in the index. According to the report, business activity in May turned out to be -43.1 points, higher than economists forecast of -40 points. The previous value of the index is -56.6.

The speech of Fed Chairman Jerome Powell still contained similar statements as earlier this week. Powell once again repeated the weak situation of the economy, but promised that the Fed has all the tools at its disposal to deal with it. Powell said that the crisis will affect those who are least able to bear it, but economic activity will resume after the people finally deem the coronavirus situation as safe.

As for the current technical picture of the EUR/USD pair, the US dollar is gradually regaining its position by the end of the week. From a larger fall, the quotes now hold the area of 1.0920, the breakout of which will lead to a new wave of short positions that will push the euro to the lows of 1.0870 and 1.0820. The demand for risky assets will return, after the bulls manage to regain the resistance level of 1.0970, from which speculative sellers will try to form the upper limit of a new downward channel.