EUR/USD had a successful week, rising to a new 2+ year high, overcoming obstacles.. Where is it headed now? Inflation data, Weidmann’s speech, German ZEW Economic Sentiment and EU Economic Summit are the main market-movers. Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD. It seemed like smooth sailing for the common currency: fears about China didn’t really hurt it, and some global optimism sent the pair to a two year high. Yet all this didn’t last: when Draghi opened his mouth and tensions rose in the Russia – Ukraine conflict, the euro took a hit but eventually staged an impressive recovery to high ground. Can the euro break above 1.40 or is this already too much? [do action=”autoupdate” tag=”EURUSDUpdate”/]EUR/USD daily graph with support and resistance lines on it. Click to enlarge: Inflation data: Monday, 10:00. Euro zone consumer prices plunged 1.1% in January, pulled down by a fall in non-energy industrial products, registering the fastest monthly drop ever recorded. Annual inflation remained at 0.8%, far below the European Central Bank’s target. Economists forecasted a price rise of 0.9% in January. Greece and Cyprus remained stuck in deflation. Only three countries in the bloc, Estonia, Latvia and Slovakia, saw a price increase in January. CPI is expected to edge up 0.8%, while Core CPI is predicted to gain 1.0%. Jens Weidmann speaks: Monday, 15:00. Deutsche Bundesbank President Jens Weidmann will speak in Kiel. Weidmann supported ECB President, Mario Draghi’s view that economic recovery is moderate but still fragile and called the Euro-zone citizens to trust the ECB to handle monetary policy to achieve price stability. German ZEW Economic Sentiment: Tuesday, 10:00. The ZEW survey of economic sentiment in Germany fell to 55.7 points in February, dropping 6 points from the previous month. The weak reading was influenced by uncertainties regarding the employment condition, US concerns that the current economic growth could lose momentum and emerging economies volatility. The ZEW survey is expected to decline to 52.3. ZEW Economic Sentiment: Tuesday, 10:00. Economic expectations in the euro zone, declined in February by 5.4 points to 68.5. Analysts expected a higher reading of 73.9. The decline in sentiment may attributed to concerns about U.S. economic recovery, and market volatility in emerging markets. Despite the relatively weak reading, ZEW President Clemens Fuest believes this decline in economic expectations is a temporary setback, since the majority of surveyed financial market experts remain optimistic. A further decline to 67.3 is expected now. EU Economic Summit: Thursday. A European Union summit in Brussels will seek ways to enhance the European industrial base as a driver for economic employment growth. “The regulatory framework both at European and national levels must be made more conducive towards investment and innovation and the reassuring of manufacturing jobs,” the document adds, referring to a drive to reverse a trend of losing employment to other regions of the world. The summit, will also hold “a first policy debate on the framework for climate and energy in the period from 2020 to 2030 and agree on the way forward in terms of orientations and procedure. Current Account: Friday, 9:00. The eurozone’s current account surplus decreased to 21.3 billion euros ($A32.44 billion) in December from 23.3 billion euros in November. Over the 12 months to December, the current account showed a surplus of 221.3 billion euros, compared with a surplus of 128.6 billion euros a year earlier. Current account surplus is expected to contract to 18.4 billion. Consumer Confidence: Friday, 15:00. Consumer confidence in the euro zone surprisingly deteriorated in February, posting its first fall since November. Consumer sentiment fell to -12.7 points from -11.7 points in January, indicating recovery is still very fragile. In the European Union as a whole, consumer sentiment also fell, but to a lesser extent, to -9.3 points from -8.8 points in January. Consumer confidence is expected to improve to -12. * All times are GMT EUR/USD Technical Analysis Euro/dollar started the week with some nice range trading between the 1.3830 and 1.3895 lines mentioned last week. It then surged higher and reached a level of 1.3965 before falling back to the previous range. 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 was a serious peak that was seen with better volume and was challenged afterwards in 2013. 1.3773 was a cap in February and beforehand in December 2013 and now switches to strong support. 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. I turn from bullish to bearish on EUR/USD While the bar is high for ECB action such as setting a negative deposit rate, the bar is high for verbal intervention when the euro is high. 1.40 seems to be a level that the ECB will not tolerate. Has the rally topped out? In addition, the crisis in Ukraine could still have a negative impact on the common currency. In the US, we have all the reasons to believe a third taper move is coming. Despite the not-so-impressing figures, the Fed is on a tightening cycle and this is USD positive. More: The growing China impact 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 NZD/USD Forecast Mar. 17-21 2014 Yohay Elam 8 years EUR/USD had a successful week, rising to a new 2+ year high, overcoming obstacles.. Where is it headed now? Inflation data, Weidmann's speech, German ZEW Economic Sentiment and EU Economic Summit are the main market-movers. Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD. It seemed like smooth sailing for the common currency: fears about China didn't really hurt it, and some global optimism sent the pair to a two year high. 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