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EUR/USD gained 0.59% last week, erasing most of the losses from the previous week. There are five events on the calendar this week. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.

German industrial production stagnated in December, with a reading of zero. It was the first time in eight months that the indicator didn’t register growth. Inflation was a bright spot, as German CPI rose from 0.3% to 0.8% in January. Germany’s Whole Price Index (WPI) jumped to 2.1%, up sharply from 0.6%. Eurozone Sentix Investor Confidence surprised with a small contraction, with a reading of -0.2. Analysts had projected a gain of 4.1.

In the US, inflation numbers were a bit lower than expected, and the US dollar’s response was muted. Headline inflation dipped from 0.4% to 0.3%, while Core CPI fell from 0.2% to 0.0%. Unemployment claims rose for the first time in four weeks, rising from 779 thousand to 793 thousand. The week wrapped up on a down note, as UoM Consumer Sentiment for January dropped from 79.2 to 76.2 points. It was the lowest level since July 2020.


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

  1. Industrial Production: Monday, 10:00. Eurozone industrial production has rebounded with two straight readings above 2 percent, but a downturn is expected, with a forecast of -0.4%.
  2. German ZEW Economic Sentiment: Tuesday, 10:00. Investor confidence jumped from 55.0 t0 61.8 in January, marking a 4-month gain. Another strong release is expected, with a street consensus of 61.0.
  3. Eurozone GDP: Tuesday, 10:00. The Covid pandemic has resulted in huge swings in the economy, with GDP readings of -12.1% and +12.6% in Q2 and Q3 of 2021, respectively. The economy is expected to level off in Q4, with an estimate of -0.7%.
  4. French Final CPI: Friday, 7:45. Inflation in the eurozone’s second-largest economy remains weak. The index has gained 0.2% in the past two months, and the estimate for January stands at 0.2%.
  5. PMIs: Friday, 8:15 in France, 8:30 in Germany, and 9:00 for the whole eurozone. Germany’s manufacturing sector continues to show strong expansion, with the January PMI coming in at 57.1. The eurozone Manufacturing PMI is expected in at 54.6, little changed from 54.8 beforehand. France came in at 51.6 and is forecast to tick higher to 51.7, pointing to slight expansion. The services sector has been in contraction with Germany and the eurozone estimated at around the 46- level. France is also expected to decline, with an estimate of 47.0.

EUR/USD Technical analysis

Technical lines from top to bottom:

We start with resistance at 1.2494.

1.2325 is next.

1.2250 has held in resistance since April 2018.

1.2140 is next.

1.2002 (mentioned  last week) is protecting the symbolic 1.20 line.

1.1846 is the final support line for now.


I remain neutral on EUR/USD

The eurozone economy has been struggling, and the Covid-19 has been beset by logistical challenges. In the US, the massive stimulus program is winding its way through Congress, which could weigh on the US dollar.

Further reading:

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