EUR/USD was pressured lower once again, as ECB members released dovish comments. And now, it is money time, with the ECB decision preceded by the all important inflation numbers. Is the ECB ready to act? Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD. Various members of the European Central Bank expressed more dovish comments than usual. Standing out were Jozef Makuch who said that there is “growing readiness to act” regarding deflation and Jens Weidmann of the Bundesbank, who did not rule out QE. In addition, the euro was hurt by weaker German business confidence and PMIs. In the US, data was somewhat better than expected, with a nice drop in jobless claims and strong consumer confidence covering for weaker new home sales. What’s next for the pair? Let’s start: [do action=”autoupdate” tag=”EURUSDUpdate”/]EUR/USD daily graph with support and resistance lines on it. Click to enlarge: German Retail Sales: Friday, 8:00. German retail sales surged in January to their strongest gain in seven years rising 2.5%, reaffirming predictions that consumer spending will boost German economy this year. January’s big gain topped market forecasts of a 1.2% rise and followed a 1.7% decline in December. Optimistic consumer sentiment and low interest rates increase spending and boost economic activity. Retail sales are expected to drop 0.3%. CPI Flash Estimate: Monday, 9:00. Inflation in the euro area accelerated at the same pace in February as in the month before, rising 0.8% on a yearly base. Analysts expected a weaker reading of 0.7%. Meanwhile core CPI, excluding energy, food, alcohol & tobacco, edged up 1% in February, following 0.8% in January. A rise of 0.6% is anticipated now. Manufacturing PMIs: Tuesday. Manufacturing activity in Italy declined to 52.3 in February from 53.10 in January. Manufacturing PMI averaged 51.23 from 2012 until 2014, reaching an all time high of 54.90 in October of 2013 and a record low of 48 in June of 2013. Meantime, manufacturing PMI in Spain edged up to 52.50 in February from 52.20 in January. The average PMI from 2011 to 2014 reached 46.41 indicating continuous contraction. Spain is expected to reach 52.9, while Italy is predicted to drop to 52.2. German Unemployment Change: Tuesday, 7:55. German unemployment declined in February by 14,000, its lowest level in nearly 1-1/2 years. The improvement in the labor market went hand in hand with growth in domestic demand. The sharp drop in the number of unemployed was larger than the 10,000 decline forecasted by analysts. In case the labor market continues to improve offering better wages, consumer spending will expand further and boost domestic demand in 2014. German unemployment is expected to drop by 9,000 this time. Unemployment Rate: Tuesday, 9:00. The unemployment rate in the Eurozone 18 member states remained unchanged in January at 12%. The same rate was maintained for the fourth consecutive month. The rate of unemployment in the larger 28-member European Union was also stable, at 10.8%, sustained since October 2013. Compared to January 2013, the number of unemployed has declined by 449,000 in the EU and by 67,000 in the Eurozone. The lowest unemployment rate in the EU was Austria’s 4.9%, followed by Germany at 5%and Luxembourg at 6.1%. However, 11 out of 28 states in the EU had unemployment rates at 10% or higher in January. The highest rate for January is in Spain, where unemployment is at 25.8%, and 28% in Greece. The unemployment rate in the Eurozone is expected to remain unchanged at 12%. ECOFIN Meetings: Wed-Thu. ECOFIN meetings are held in Brussels attended by Finance Ministers from EU member states. The members discuss financial issues, concerning the euro and government finances. Services PMIs: Thursday. Spain’s service sector continued to expand in February, reaching 53.7 following a higher score of 54.9 posted in January. The reading suggests the path to recovery is still sluggish. Meanwhile, Italy’s business activity increased at the fastest pace in almost three years, reaching 52.3. New orders improved at an accelerated rate, but net job losses were still high in January. February’s decrease was only marginal, and the slowest in the current three-year sequence of backlog depletion. Spanish manufacturing is expected to expand further to 54.1 while Italy is expected to remain at 52.3. Retail Sales : Thursday, 9:00. The Eurozone’s volume of retail sales edged up in January by 1.6% following a 1.3% drop in the previous month. Analysts expected a more modest rise of 0.9%. German retail sales climbed 2.5% in January and France registered a 1.2% increase. Despite a pick-up in growth domestic demand in the Eurozone remained weak, with a stubbornly high unemployment rate. An improvement was visible in southern Europe. A decline 0.3% is expected now. ECB rate decision : Thursday, 11:45, press conference at 13:30. Assuming that both CPI and Core CPI do not fall below 0.5% in the flash reading for March, the ECB is likely to refrain from new stimulus in March. Draghi showed us that the bar is high for more stimulus in the previous meeting. In addition, recent data from France shows that the fragile recovery is widening and this could also hold back policymakers. A lack of action in policy does not meet a lack of market action: Draghi may certainly raise the so far subtle rhetoric regarding the exchange rate. The high value of the euro weighs on exports and pushes inflation lower due to cheaper imports. It seems like 1.40 is the “line in the sand” and it will not come as a surprise if Draghi plays down the euro. However, verbal intervention is usually short lived, and action will probably be needed later on in the year.. German Factory Orders: Friday, 10:00. German factory orders rebounded in January, rising 1.2%, following a 0.2% drop in the previous month. The increase was driven by foreign demand, outside the 18 countries using the euro. Economists expected a lower increase of 1.1%. Domestic orders edged up 1.6%, while foreign orders overall rose 1%. Non-eurozone orders soared 7.2%, but orders from within the bloc dropped 8.8%. A further rise of 0.5% is forecast. * All times are GMT EUR/USD Technical Analysis Euro/dollar started the trading week with a spike to 1.3875 which was rapidly erased. After falling below 1.38, the pair tested the 1.3740 line (mentioned last week), dropped below it, but eventually closed above. Technical lines from top to bottom: The all important round number of 1.40 is of high political importance. We have seen how getting close to the line triggered a critical comment that sent it down. Below, 1.3940 served as resistance back in 2011. The 2013 high of 1.3895 is the top line looming above and it is becoming more important. 1.3830, which was a long serving 2013 peak comes back into the focus after capping the pair in March 2014. The round number of 1.38 is now a pivotal line in the range. It served as resistance in December. 1.3740, which provided some support at the end of 2013 is now key support to the downside. The round number of 1.37, is another support line after capping the pair in December. 1.3650 provided support in December and worked as resistance in September 2013, and is also a significant line. Also the February rally fell short of this line. Below, 1.3560 worked as good support twice during February 2014. The January 2014 low of 1.3515 provides minor support on the way down. 1.3450 worked as resistance in August 2013 and as support in September and October. It is now a key line on the downside. Broken uptrend support The pair clearly secured a break below the uptrend (thick black line on the chart) that accompanied the pair since February. I turn bearish on EUR/USD Not only does the ECB want EUR/USD to refrain from crossing 1.40, it probably wants it even lower, as we understand from recent comments. Even if the central bank does not act, rhetoric will probably strengthen to weaken the currency. Soft German inflation numbers strengthen the notion. In the US, we see no real retreat from Yellen’s “6 month from QE end to rate hike” comment, and the data is certainly positive. An OK NFP should be enough to keep the greenback bid. More:: 5 most predictable currency pairs 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 For the kiwi, see the NZDUSD 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/JPY Forecast Mar. 31 – Apr. 4 Yohay Elam 8 years EUR/USD was pressured lower once again, as ECB members released dovish comments. And now, it is money time, with the ECB decision preceded by the all important inflation numbers. Is the ECB ready to act? Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD. Various members of the European Central Bank expressed more dovish comments than usual. Standing out were Jozef Makuch who said that there is "growing readiness to act" regarding deflation and Jens Weidmann of the Bundesbank, who did not rule out QE. 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