The common European currency has come under strong downward pressure. The first target of bears is the round level of 1.1700.

If bears are able to break through this level, it will be easy for them to drag the euro/dollar pair even lower.

In other words, a prolonged downtrend seems to be emerging. Sellers pushed the euro/dollar pair behind the upper line of the 1.1600-1.1700 area. Earlier, the euro repeatedly received support from buyers in that area. Now the currency will hardly be able to resist as the reason is not just the stronger US dollar. The euro also fell against other competitors.

At the beginning of the week, the euro weakened against the Japanese yen. The euro/yen pair slipped below the 200-day moving average. There is a clear sign of a downward reversal. Based on the recent momentum, a head and shoulders pattern has been formed, which indicates a pullback of the quotes to the levels of last November - 122.50.

Besides, the European currency dropped against the Swiss franc yesterday. In early August, the euro/franc pair was supported amid a decline towards the level of 1.0720. The current situation is similar, probably due to the central bank of Switzerland. The pair's losses in August seem to be particularly alarming, and the regulator could take steps to stop this almost half-year decline.

However, this is just an assumption. On Wednesday, the euro bounced upwards slightly. Nevertheless, it has been trading near the lows since last November. Maybe the Swiss National Bank has not taken any measures, since the current situation points to a fall in the euro rather than to a rally in the franc.

From a fundamental point of view, the single currency looks very weak. There are many reasons: a slowdown in China's economic growth, the coronavirus pandemic, high prices for commodities and gas imported to Europe. The US dollar is gaining in value. It rallied yesterday despite downbeat US macroeconomic data. Retail sales fell stronger than expected.

Perhaps investors have perceived the news in a different way. Weak consumption in the world's largest economy could have a severe negative impact on the global economy. This prompted market players to buy the safe-haven dollar.

Furthermore, the US dollar was supported by market expectations of an earlier phase-out of the quantitative easing program. However, Jerome Powell gave a speech but left no comments on monetary policy, which allowed the greenback to make a significant upward movement. The minutes of the Fed's July meeting is set to be released on Wednesday. The US dollar may become even stronger amid this news. The minutes may indicate that the regulator is about to cut its asset purchases.

Inflation does not seem to cause much concern, but not all officials can confirm this. Some of them still express concerns about the inflation rate of 5.4%. Moreover, nonfarm payrolls for the last two months seemed to be quite promising. Perhaps the labor market has entered the home stretch. Albeit uncertain, but still the reason for starting to reduce asset purchases.

On the 4-hour chart, the euro/dollar pair is still trading downwards, but buyers have a chance of breaking through it. The quotes will meet the next support at the levels of 1.1614 and 1.1500.

The levels of 1.1725, 1.1755, and 1.1785 act as resistance. All these levels have prevented the euro from falling in recent sessions.