The upcoming week features major German surveys as well as many other indicators. Here’s an outlook for the main European events and an updated technical analysis for EUR/USD.

EUR/USD chart with resistance and support lines on it. Click to enlarge:

Spanish problems caused great worries in the past week, with rumors of a bailout package being cooked in Brussels. The debt issues will continue accompanying us, but many indicators will have an impact as well. Let’s begin:

1. Jean Claude Trichet talks: Starts testifying in the European parliament on Monday at 16:30 GMT. The head of the ECB will have a chance to lay out his prospects for the Euro-zone, discussing a possibility of recession and maybe future moves on the rates.
2. German Ifo Business Climate: Published on Tuesday at 8:00 GMT. This very wide survey of 7000 businesses was usually better than other European indicators, rising steadily month after month. But also this index stalled last month. From 101.5 points, this indicator will probably drop to 101.2 this time.
3. Current Account: Published on Tuesday at 9:00 GMT. The overall balance of money, services and goods surprised by turning positive last month – a surplus of 1.7 billion was reported last month, after two months of deficits. Despite lagging after the trade balance release, it still helped the Euro. A smaller surplus is predicted this time – 1.3 billion euros.
4. Consumer Confidence: Published on Tuesday at 14:00 GMT. This official European survey of 2300 consumers showed growing pessimism in the old continent, with the index falling to -18. The upcoming figure relates to the month of May that was awful, so a lower result will probably be seen now.
5. German GfK Consumer Climate: Published on Wednesday at 6:00 GMT. Complementing the survey from Tuesday, this unofficial survey has followed the same trend – it dropped last month as well. Consumers are expected to be less confident now as well, with the indicator dropping from 3.5 points to 3.3 points.
6. Flash PMI: Published on Wednesday, starting  in France at 7:00 GMT, then in Germany at 7:30 and finally for the whole Euro-zone at 8:00 GMT. All the purchasing managers’ indices have been positive for several months, with the French services sector being the strongest at 61.4. And now, all of them are expected to remain positive, above 50 (which means economic expansion) but drop. May wasn’t an optimistic month in Europe.
7. NBB Business Climate: Published on Wednesday at 13:00 GMT. At the heart of the European Union, in Belgium, 6000 businesses are asked about their level of confidence. This indicator already made a big drop last month by unexpectedly falling from -2.4 to -4.9. Another drop to -5.1 points is expected now. Note that the negative numbers mean pessimism.
8. French Consumer Spending: Published on Thursday at 6:45 GMT. Europe’s second largest economy saw a squeeze of 1.2% in consumer spending last month – quite a big drop. A correction is expected this time, with a rise of 0.3%.
9. Industrial New Orders: Published on Thursday at 9:00 GMT. This figure stood out last month, with a huge leap of 5.7%. The forecast for this release is optimistic as well – another rise of 1.6%. A drop cannot be ruled out.

The Euro had a fantastic week. It first broke the important 1.2150 line from which it fell to the deep lows. It then continued and traded between 1.2250 (a new line that didn’t appear last week) and 1.2330, also known as the Lehman level, before breaking above it and closing at 1.2388.

Looking up, the next line of resistance is 1.2460, which was a peak a few days ago. This is followed by 1.2520, a line that stopped the Euro during its fall. The swing high of 1.2670 is the next line.

A great recovery of the Euro will meet resistance at 1.2880, which was a support line one year ago. There are more lines on the chart, but they’re quite far at the moment.

Looking down, 1.2330 provides minor support, and so does 1.2250. 1.2150 is already a stronger support line, as it worked as a distinctive pivotal line.

Lower, 1.20 is a round number eyed by politicians and provides strong support, and its followed by the year-to-date low of 1.1876.

I turn neutral on EUR/USD.

The past two weeks of strong rises on short covering cannot be ignored. The Euro fell strongly and is now stabilizing. Still, the European debt problems, especially in the fourth largest economy, Spain, continue to loom over the old continent. As the scenario of a double dip recession becomes real, the Euro will resume falling. In the meantime, range trading is more probable.

This pair receives great reviews. Here are my picks:

• James Chen updates on the bullish run and marks the key upside resistance at 1.2460.
• Casey Stubbs updates on the last trades in EUR/USD.
• Marco Hague discusses this week’s soft dollar on Forex TV.
• TheGeekKnows reviews the week and looks forward.

Further reading on Forex Crunch:

• For a broad view of all the week’s major events worldwide, read the forex weekly outlook.
• For GBP/USD  (cable), look into the British Pound forecast.
• For the Australian dollar (Aussie), check out the AUD/USD forecast.
• For the New Zealand dollar (kiwi), read the NZD/USD forecast.
• For USD/CAD (loonie), check out the Canadian dollar forecast.

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