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The USD index continued to rebound on Monday from the area below 93 points, rushing to new local highs amid a decrease in risk appetite.
The deterioration in investor sentiment is associated with increased fears about the rapid spread of coronavirus in the world, which could trigger a new wave of quarantine measures and another round of slowdown in business activity.
At present, the demand for the greenback as a safe haven asset has resumed, resulting in the strengthening of the US dollar against its main competitors, including the euro. After updating the local highs around 1.1870, the EUR / USD pair sharply declined.
The pressure on the common European currency is exerted by the news about the worsening epidemiological situation in the EU. Even before the weekend, Greece and Denmark announced the introduction of new restrictive measures. On Monday, the German health Minister expressed concern about the rate of spread of COVID-19 in the region. He noted an increase in the number of coronavirus infections in Austria, the Netherlands, Germany, and France.
There are fears that the European economy will again come under pressure and the pace of its recovery will significantly slow down against the background of tougher quarantine measures.
The nearest support for the EUR/USD pair is at 1.1750. A clean breakdown of this barrier will bring the 1.1735 and 1.1700 levels into play. The inability of the bulls to protect the 1.1700 mark may lead to a more stable decline and testing of the next round level of 1.1600.
Strong resistance is located around 1.1900. Its breakdown can trigger a short squeeze and push the pair to 1.1930-1.1950, from where it can target the key psychological mark of 1.2000.
This week, traders ' attention is once again focused on the US Federal Reserve Chairman, Jerome Powell. On Tuesday, he will appear before the Committee on Financial Services of the House of Representatives. On Wednesday, Powell will make another appearance in the House of Representatives, and on Thursday before the Senate Banking Committee. Investors are hoping to hear tips from the head of the Federal Reserve on the regulator's new approach to inflation. It's not yet clear whether Powell will say something fundamentally new or will only repeat what he said earlier. Although the second option is most likely, however, the comments of the Fed Chairman may well cause an increase in the volatility of the EUR/USD pair.
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