The EUR/USD pair has been reaching new intraday lows for the fourth consecutive session. The downtrend strengthened after the bulls had made several unsuccessful attempts to settle above 1.1900.

According to experts, a drop below 1.1700 will lead to a stronger decline, pushing the major currency pair to the level of 1.1650 and lower.

"The EUR /USD current trajectory largely resembles the price dynamics seen before the downside correction that happened in June. Then the price went from 1.1422 to 1.1168. This scenario carries the risk of a deeper retracement. A drawdown to the area of 1.1475-1.1530 is highly possible now," analysts at Citigroup said.

Investors are now shifting from the euro to the US dollar amid reports that the sell positions for USD and buy positions for EUR have reached record highs. This may signal that many traders have already bet on the growth of the euro against the dollar. However, this could have deprived the single European currency of a driver for further rise. On the other hand, it could indicate a broader recovery in the US currency.

The greenback got a chance to rebound on hopes that a new stimulus package will be approved in Washington. Besides, the recovery of the US government bond yields from their multi-month lows provided additional support for the US dollar.

Last weekend, US President Donald Trump approved a supplement of $400 to unemployment benefits, and signed orders on other stimulus measures.

"Compared to the previously discussed agreement on the stimulus package worth $1-1.5 trillion, a positive effect on the economy from the announced measures will be much weaker. However, investors seem to hope that some kind of a deal will follow in the end," JPMorgan said.

Meanwhile, tensions between Washington and Beijing continue to escalate. Donald Trump said yesterday that the trade deal with China means much less to him now. This comment was made just before the next round of trade negotiations between senior representatives of the two countries.

Investors seem to downplay the fact of the worsening relations between the United States and China. However, they are very concerned about the outcome of the trade agreement. If it is terminated, then stocks could slump and the greenback would rise as a safe-haven asset.

"The weakening of the US dollar against the euro has exceeded our expectations, but the movements seen in the recent weeks are unlikely to be sustainable," analysts at HSBC said.

"It looks like the global economic recovery will be relatively slow. At the same time, in the United States, according to the latest statistics, the picture does not look as grim as many investors thought. Therefore, we remain optimistic about the outlook for the US currency and still think that to the EUR/USD will remain at 1.10 by the end of 2020," experts added.