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EUR/USD had its worst week since early August, as the pair declined by 1.2% and dropped close to the 1.12 line. There are 8 events this week. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.

The eurozone manufacturing sector continues to contract, as indicated by German and the eurozone manufacturing PMIs. The German index came in at 45.0, shy of the estimate of 45.4. The eurozone PMI showed little change, coming in at 47.6. This was close to the forecast of 47.8. There was better news from the services sector, with PMIs pointing to expansion. The German index improved to 55.8 and the eurozone PMI climbed to 53.6 points. German retail sales posted a third straight decline, as German consumers are holding tighter to their purse strings. The May release of -0.6% caught the markets by surprise, as analysts had projected a gain of 0.5%.

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

  1. Greek Parliamentary Election: Sunday, All Day. Voters go to the polls on Sunday, after Greek Prime Minister Alexis Tsipras called a snap election after Tsipras fared poorly in the recent EU elections. Tsipras’ Syriza party is expected to lose to the conservatives.
  2. German Industrial Production:  Monday, 6:00. The German manufacturing sector remains soft, and has posted mostly declines since the third quarter. The indicator declined 1.9% in April, marking a 5-month low. The markets are expecting a turnaround in May, with an estimate of 0.4%.
  3. Sentix Investor Confidence: Monday, 8:30. Investors have been pessimistic about economic conditions in the eurozone, recording six declines in the past seven months. The June reading of -3.3 was surprisingly soft, as the forecast stood at 2.3. The markets are predicting a small gain of 0.3 points.
  4. French Industrial Production: Wednesday, 6:45. The indicator rebounded in April, with a gain of 0.4%. This follows the March release of -0.9%. Little change is expected in May, with an estimate of 0.3%.
  5. German Final CPI: Thursday, 6:00. The markets have been very accurate in their recent forecasts of German inflation. In May, inflation slowed to 0.2%, matching the forecast. In June, the initial estimate came at 0.3% and this reading is expected to be confirmed as the final estimate.
  6. ECB Monetary Policy Meeting Accounts: Thursday, 11:30. Investors will be combing through the minutes of the June policy meeting. If policymakers sound pessimistic about economic conditions in the eurozone, the euro could lose ground.
  7. French Final CPI: Friday, 6:45. French inflation has been de-accelerating, and posted a weak gain of 0.1% in May. This was short of the estimate of 0.2%. The June forecast remains at 0.2%.
  8. Eurozone Industrial Production: Friday, 9:00. The eurozone manufacturing sector has been sputtering, and industrial production has indicated contraction in five of the past six months. The markets are expecting a rebound in May, with an estimate of 0.2%.

EUR/USD Technical analysis

Technical lines from top to bottom:

1.1620 has held in resistance since early October. 1.1570 is next.

1.1515 was a high point at the end of January. 1.1435 was a low point at the beginning of February.

1.1390 was a stepping stone on the way up in late January and capped EUR/USD earlier.

The pair broke below support at 1.1345 early in the week.

1.1290 is next. Close by, 1.1270 was a double-bottom in December 2018.

1.1215 has been providing support since mid-June.

1.1119 (mentioned last week) has held in support since the end of May.

1.1025 was a cap back in May 2017.

1.0950 is next.

1.0829 is the final support line for now.

I remain bearish on EUR/USD

The U.S. economy continues to perform well, and strong employment numbers mean that the Fed could hold off from a rate cut in the fall. The eurozone continues to struggle, weighed down by weak manufacturing activity.

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