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Looking for the latest outlook, for the current week? Check out the section: EUR/USD Forecast

The Euro went even lower this week, and got used to a new range. The last week of 2009 doesn’t have many indicators, but German inflation numbers are still important with the Euro-zone’s deflation. Here’s an outlook for the upcoming week in Europe, and an updated technical analysis for EUR/USD.

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

Euro Dollar Forecast16

In the past short Christmas week, the Euro moved mostly by the dollar’s numbers, enjoying a disappointing New Home Sales figure and falling again with better American figures. Let’s see what’s up in Euroland this week. The technical analysis will follow:

  1. German Prelim CPI: Published during the day from the different German states. German prices are rather stable. Last month’s 0.1% drop was  preceded  with a rise at the same small scale. Deflation continues to weigh on Europe.
  2. M3 Money Supply: Published on Wednesday at 9:00 GMT. The amount of money in circulation has grown very slowly in recent in months. Not only has it slowed don, it fell short of expectations in the past four months, reaching a rock bottom 0.3% growth rate last month.

EUR/USD Technical Analysis

EUR/USD traded lower, and went as low as 1.4217 before rising up to 1.4437 on thin Christmas trading. It closed at 1.4397. All in all, the range of 1.42 to 1.4444 characterized the trading.

The support and resistance lines haven’t changed since last week’s outlook.  The support line of 1.42 is now stronger, as it was successfully tested this week. Looking below, 1.40 is an important psychological barrier and also served as a stepping stone for the pair on it’s way up.

Further down, 1.3750 is a major line of support. It worked as a support and resistance line earlier. Strong news is necessary for this line to break.

Looking up, 1.4444 that was a strong resistance line during the summer, returned to its position also now. 1.4480 is also notable as it served as support after EUR/USD broke 1.4444 to the upside.

Further above, 1.4626 was a support line a few weeks ago, and is now a minor resistance line. Even higher, 1.48 was the bottom border of a previous range for a long time in recent months.

I remain bearish on EUR/USD.

As in the previous week, I think that the problems in the old continent continue to cause trouble for the Euro, as American indicators are already quite OK. The thin holiday volume probably means another week of range trading before a stronger week at the beginning of 2010.

EUR/USD enjoys many good articles on the web, although some of the authors are holiday…

  • James Chen talks about the consolidation of EUR/USD after the breakdown.
  • The Geek Knows reviews the week and looks forward.
  • Casey Stubbs talks brings a holiday report about EUR/USD.

Further reading on Forex Crunch:

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