In the absence of new dovish signals from the Fed, the greenback headed upwards, however, stronger-than-expected growth in weekly jobless claims in the US forced the dollar to retreat.

It came literally a day after Fed officials warned that the country's hiring recovery was starting to slow, sowing doubts about how quickly the world's largest economy could recover from the coronavirus pandemic.

According to data released on Thursday, in the week ended August 15, the number of new applications for unemployment benefits in the United States increased to 1.106 million against the forecast of 930,000.

On Friday, the US dollar resumed its attack on the positions of its main competitors, including against the euro.

After reaching local highs around 1.1880, the EUR / USD pair reversed and sank rather quickly below 1.1800.

According to Markit Economics, in August, the composite PMI in the euro area dropped to 51.6 points, compared with 54.9 points recorded in July. Experts stressed that this may indicate a slowdown in the pace of economic recovery in the currency bloc.

Currently, the EUR / USD pair is showing a correction from the overbought levels, which is supported by the bearish divergence of the RSI indicator. The 1.1690-1.1700 area will become strong support in the event that the bears do gain the upper hand.

After the collapse of recent months, the greenback looks pretty oversold. Under the current conditions, the buyers of the US dollar may be those investors who will fix a part of the profit from the sale of USD earlier, as well as those who stake on accelerating the recovery of the American economy against the slowdown of that of Europe.

In the US, the number of new cases of COVID-19 infections has declined, contrary to Europe which continues to record additional cases. Against this backdrop, European authorities may return some of the coronavirus restrictions, which will increase concerns about a W-shaped economic recovery in the eurozone instead of a V-shaped one.

"After a strong rally in EUR / USD during the summer, which was mainly driven by the sale of the dollar rather than the rise in the euro, we see downside risks for the main currency pair for the rest of the year, mainly due to an upward greenback correction," said strategists at Bank of America.

They point to overly positive outlooks for the global economy, overly optimistic expectations regarding the development of a coronavirus vaccine, and overly pessimistic views on the situation with COVID-19 in the US compared to the situation in Europe.

"With so many unknowns, risk aversion will be a negative factor for EUR / USD," BofA said.

Although the EUR / USD pair, which previously hit two-year highs, has pulled back, it has not yet suffered crushing losses. More significant would be a failure of the pair below 1.1700.

However, as the events of recent weeks have shown, investors are ready to buy out even small drawdowns. Based on this, the current decline in EUR / USD should be viewed as a respite for the bulls before a new attempt to renew multi-month highs and push quotes above 1.2000.