EUR/USD advanced to a new 6 month high but eventually retreated back to range. Can it continue advancing? German Ifo Business Climate, employment data as well as German inflation data are the main events on our calendar this week. Here is an outlook on the main market-movers and an updated technical analysis for EUR/USD. Last week German and Eurozone PMIs proved once again that the Eurozone is out of recession. Germany beat expectations with strong Services and Manufacturing PMIs leading the euro-zone to expansion. The main disappointment came from France with weaker than expected PMI readings. However all in all, the euro-area is on the right direction. In the US, the FOMC meeting minutes strengthened the notion that tapering is coming, but not all is well in the US. Let’s Start [do action=”autoupdate” tag=”EURUSDUpdate”/]EUR/USD daily chart with support and resistance lines on it. Click to enlarge: German Ifo Business Climate: Tuesday, 8:00. German business confidence increased for the third consecutive month in July, reaching 106.2 from 105.9 in June, slightly lower than the 106.3 forecasted by analysts. The recent upbeat suggests German economy is recovering. German unemployment unexpectedly dropped in June and was the first euro-area manufacturing to show expansion in two years in July. Business climate is expected to reach 107.1 this time. GfK German Consumer Climate: Wednesday, 6:00. German consumer sentiment soared to a fresh six-year high in July, rising to 7.0 points from 6.8 in June, higher than the 6.9 reading projected by analysts. This rise was aided by robust employment and a moderate inflation boosting consumption and growth. However Germany’s recovery will have its setbacks due to persistent recessions in fellow Euro-area countries. A further rise to 7.1 is forecasted. German Import Prices: Wednesday, 6:00. Germany’s import prices continued to decline in June, falling 0.8% compared with a 0.4 percent fall in May. The reading missed predictions for a 0.4% gain. On a yearly base, import prices declined 2.2% in June, following a 2.9% drop in May. The pace of decline, however, was the tamer in four months. A gain of 0.3% is anticipated now. M3 Money Supply: Wednesday, 8:00. The Eurozone seasonally adjusted annual M3 index dropped to 2.3%in June compared to 2.9% in May, missing analyst’s median estimates of 3.0%. A 2.0% rise is predicted this time. German CPI: Thursday. Preliminary data revealed inflation increased by 0.5% in June due to higher food costs attributed to a cold winter, floods which swept through eastern and southern Germany in June and a heat wave. The rise was higher than the 0.3% increase anticipated and followed a 0.1% gain in May. A further rise of 0.2% is expected. German Unemployment Change: Thursday, 7:55. The number of unemployed in Germany dropped unexpectedly by 7,000 in July, leaving unemployment rate close to its lowest level since the Eurozone formation. The improvements in hiring and salaries indicate private consumption will continue to support growth in the coming months. Another drop of 5,000 unemployed is anticipated. German Retail Sales: Friday, 6:00. German retail sales fell by 1.5% in June, the biggest drop this year. Household spending failed to boost growth in the second quarter. On an annual basis, the retail sales fell 2.8%, their largest drop in 2013. This decline was preceded by a 0.7% gain in the previous month. Nevertheless, consumer confidence remained strong. A gain of 0.5% is forecasted. Italian Monthly Unemployment Rate: Friday, 8:00. Italy’s unemployment rate remained near a record high in June with a mild drop to 12.1% from 12.2% in May. Companies did no hiring amid the country’s recession. The reading was worse than the 12.3% estimated; unemployment remained above 10% for a 17th month. Italian Government plans to pass a second package of measures for youth employment later this year to boost hiring. A rise to 12.2% is projected. CPI Flash Estimate: Friday, 9:00. The Eurozone inflation rate reached 1.60% in July according to market predictions. The main components measures for the CPI Index include: food, alcohol and tobacco, energy, non-energy industrial goods and services. Unemployment Rate: Friday, 9:00. The eurozone labor market continues to suffer a large scale unemployment and rampant youth joblessness. The number of unemployed declined slightly in June but unemployment rate remained unchanged at 12.1%. Analysts expected a worse reading of 12.2%. However, June’s small drop in unemployment can also mean a turn for the better for the Eurozone’s beaten economy. *All times are GMT EUR/USD Technical Analysis Euro/dollar started the week under the 1.3350 line, and eventually continued higher. It then broke the critical 1.3415 line (mentioned last week) and traded at a 6 month high. This line was lost and served as resistance. The pair eventually closes at 1.3381.. Technical lines from top to bottom: 1.37 was the 2013 peak, and is still far. 1.3590 capped EUR/USD back in February and is minor resistance. 1.3520 was a swing high in February, before the pair tumbled down. 1.3450 is the new peak of August 2013 and serves as the next resistance line. 1.3415 was the peak back in June and serves as a strong line of resistance, also after the break. 1.3350 provided support when the pair traded higher in February and weakens now. 1.33 worked as support during late August 2013 and remains relevant. It is followed by 1.3240, which capped the pair in April and also had a role in August. 1.3175 capped the pair during July 2013 and works as another line of defense for any moves to the downside. It proved its strength during July 2013 . 1.3100 is worked as temporary resistance in December 2012 and is becoming more important once again, after capping a recovery attempt in June and then in July. It is followed by 1.3050, which proved be strong support in May 2013, defending the round number in more than one occasion, but it is less significant now. The very round 1.30 line was a tough line of resistance. In addition to being a round number, it also served as strong support and recently worked as a pivot line. 1.2940 is the next line of support. It worked as such during April and May 2013. Uptrend support and resistance Since mid July the pair trading along an uptrend support line, which it touched three times but it now moved away from this line. Since late July, we can also spot uptrend resistance. I am neutral on EUR/USD Another call for a third Greek bailout, this time by the head of the Eurogroup, didn’t move the euro, which remains strong and prefers to look at the positive German data. Also the emerging markets bond rout indirectly supports the euro. Also the dollar has support of its own: from the growing notion that the Fed will begin tapering in September, perhaps by $15 billion. Currently a “Septaper” is a close call for the Fed and the markets. In the last days of summer, we could see some more volatility, but no clear choice of direction. More on EUR/USD: Forex Analysis: EUR/USD Advances Sharply to Six-Month High – by James Chen Euro strength – how long will it last? – by Ronnie Chopra. If you are interested a different way of trading currencies, check out the weekly binary options setups, including EUR/USD and more. Further reading: For a broad view of all the week’s major events worldwide, read the USD outlook. For the Japanese yen, read the USD/JPY forecast. For GBP/USD (cable), look into the British Pound forecast. For the Australian dollar (Aussie), check out the AUD to USD forecast. USD/CAD (loonie), check out the Canadian dollar forecast Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam EUR/USD ForecastMajors share Read Next USD/CAD Outlook August 26-30 Kenny Fisher 9 years EUR/USD advanced to a new 6 month high but eventually retreated back to range. Can it continue advancing? German Ifo Business Climate, employment data as well as German inflation data are the main events on our calendar this week. Here is an outlook on the main market-movers and an updated technical analysis for EUR/USD. Last week German and Eurozone PMIs proved once again that the Eurozone is out of recession. Germany beat expectations with strong Services and Manufacturing PMIs leading the euro-zone to expansion. The main disappointment came from France with weaker than expected PMI readings. 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