The widespread cut of interest rates long before the coronavirus crisis used to support the greenback as the US government bonds attracted investors with higher yields. However, interest rates in the US have almost reached the level of those in Europe and Japan, and additional purchases of assets by the Federal Reserve made the situation even worse. As a result, the long-term bullish trend for the US dollar was replaced by a bearish one.

The US Dollar Index sank from the high of 103 points in March to two-year lows of 92-93 points in summer.

"Even after the recent easing, the greenback is still holding 6% above its long-term average," strategists at JP Morgan noted.

"The creation of the EU anti-crisis fund of €750 billion has raised market confidence in the euro as an alternative to the dollar. At the same time, shrinking yields reduce the attractiveness of the American dollar and push investors towards other currencies. These periodic factors will not disappear quickly, so the USD rate is likely to continue its decline," they added.

Experts at Goldman Sachs support this view:

"The greenback is still overrated. US interest rates are likely to remain negative for several years. Besides, the global economy will resume its sustainable growth as soon as the coronavirus pandemic ends. All of these factors are typical of the structural weakness in the US dollar," they said.

At the same time, analysts pointed to a number of factors that may support USD in the near future.

"First of all, the uncertainty around the COVID-19 pandemic still persists. Secondly, the further policy of the Fed is difficult to predict. Finally, the political environment in the United States remains challenging," experts at Goldman Sachs noted.

Last week, the US Dollar Index reached its lowest level since May 2018. Later, the greenback managed to win back some losses after the release of the minutes form the FOMC meeting in July. The Fed revealed a much tougher stance on the monetary policy than was previously expected.

On Thursday, Fed Chairman Jerome Powell is scheduled to deliver a speech at the annual Jackson Hole economic symposium. The head of the US central bank may shed light on the future plans of the regulator.

Jerome Powell's cautious attitude towards additional stimulus measures and the urge to increase the support of the national economy is likely to disappoint the markets, and the safe greenback may regain ground.

In addition, important macroeconomic data is expected this week in the US as it will show the state of the world's largest economy. The final estimate of the US GDP for the second quarter this year is due on Thursday.

Meanwhile in Europe, the number of new coronavirus cases is far from decreasing. This has already resulted in the downbeat PMI data in France and Germany. While there is no new surge in the number of COVID-19 cases in Europe, the situation could change quickly at any time.

Last Friday, the EUR/USD pair slipped below the level of 1.1800, hitting a weekly low amid disappointing data on business activity in the eurozone in August. After a short correction, the main currency pair resumed its upward movement. The pair is unlikely to break out of the 1.1855-1.1860 channel ahead of the Jerome Powell's speech in Jackson Hole

If the EUR/USD pair edges lower, the bulls' activity may increase near the support level at 1.1755-1.1760. A breakout of this level will signal the downward trend, and the price would head for the monthly low at 1.1700.