Euro/dollar slid within the range in a week that saw a deterioration in the global mood. The upcoming week features the highly anticipated EU Summit among other events. Will we see progress with Spain and Greece? Here is an outlook for the upcoming events and an updated technical analysis for EUR/USD. Spain’s credit downgrade by S&P added to the nation’s troubles. The potential Spanish bailout request does not seem that close now. One of the factors that weighs on such a request is the statement by Merkel’s adviser that Germany is actually thinking about its banks when lending a hand to other countries. Together with the depressing forecasts by the IMF, these dark clouds overshadowed potential progress in Greece. In the US, another positive jobs figure caused controversy, again. The US uncertainty will likely step aside for an important week in the debt crisis. Updates: Italian Trade Balance disappointed, posting a small deficit of 0.6 billion euros. The market estimate stood at a surplus of 2.57B. German ZEW Economic Sentiment was better than forecast, climbing nicely to -11.5 points. The estimate stood at -14.6 points. Euro-zone came in at 2.6%, just below the forecast of 2.7%. Euro-zone Core CPI climbed 1.5%, a notch lower than the estimate of 1.6%. Euro-zone ZEW Economic Sentiment improved to -1.4 points, but this was still below the market forecast of -1.1 points. Euro-zone Trade Balance looked sharp, as the surplus widened to 9.9 billion euros. The estimate stood at 8.4B. The euro continues to climb, as EUR/USD was trading at 1.3052. The European Economic Summit is being held in Brussels on Thursday and Friday, as 27 European leaders convene for talks. Spain’s 10-year bond yield continues to drop, posting an average yield of 5.46%. The Euro was steady after its strong rally earlier in the week. EUR/USD was trading slightly above the 1.31 line, at 1.3108. EUR/USD daily graph with support and resistance lines on it. Click to enlarge: Spanish 10 year bond auction: Tuesday, 9:00. Spain will raise both short term and benchmark 10 year bonds in a critical timing. The recent auction was rather favorable, and saw a significant drop in yield from 6.65% to 5.67%. However, the mood has dampened since then, and Spain will likely pay a higher price. If the result is very bad, it could push Spain to ask for a bailout in the EU Summit, as the bailout request also depends on yields. German ZEW Economic Sentiment: Tuesday, 9:00. After a few months of deterioration, this important survey of 350 investors has improved to -18.2 points, still a negative figure. For October, a small drop is likely as the global outlook looks worse. For many, the euro represents Germany, but also the strong locomotive of the zone is not looking good recently. This figure will likely join the rest and reflect deeper pessimism. The all-European reached -3.8 points last month, and is likely to retreat. CPI: Tuesday, 9:00. Despite the economic deterioration, some commodity prices keep prices above the 2% target and hold back the ECB from cutting rates. The preliminary figure of 2.7% for September will probably be confirmed now. Core CPI will likely remain around 1.5%. Trade Balance: Tuesday, 9:00. Thanks to Germany’s high surplus, the whole euro-zone enjoys a positive balance, recorded at 7.9 billion euros last month. For August, a similar number is expected. EU Summit: Thursday and Friday. Both Spain and Greece will dominate the agenda of European leaders. This is yet another deadline for Greece. On this front, things look better after Merkel’s visit to Athens. The troika could eventually write a relatively positive report about the debt hit country – a report that will open the door to more aid. However, nothing is certain and every statement towards the summit and during the event will shake the euro. Regarding Spain, things are more complicated, especially as regional elections are held on Sunday, October 21st, and they could postpone a request from the zone’s fourth largest economy. Other topics are the Financial Transaction Tax and a separate budget for the euro-zone. Also in this summit, the UK will likely move a bit further away from its euro-zone peers. German PPI: Friday, 6:00. Producer prices in Europe’s largest economy have risen by 0.5% last month. A smaller rise is expected for the month of September. This also has an impact on the ECB. Current Account: Friday, 8:00. Similar to the trade balance figure, also here Germany pushes the figure higher. The surplus stood on 9.7 billion in July and probably rose a bit during August. * All times are GMT EUR/USD Technical Analysis â‚¬/$ started with a challenge of the 1.3060 line (mentioned last week). But after it failed to break higher, the pair went from weakness to weakness and lost the next lines, 1.30, and 1.2960, that quickly turned into resistance. All in all, not a positive week. Technical lines from top to bottom: We start from lower ground, mostly due to the narrower ranges. 1.3480 is very important resistance: it was the peak seen in February. At the time, it was very stubborn. 1.3437 is of historic significant and is a minor line now. The round level of 1.34 is a strong cap after serving as such during March. 1.3290 worked as resistance for the pair during April and is also of importance. 1.3170 worked very well as a double top during September 2012 and is now the top frontier. 1.3105 provided some support in April and is a weak line at the moment. 1.3060, was a clear separator in May and also had an important role beforehand. It slowed the rally in September 2012 and is still very relevant after capping a recovery attempt in October. The very round 1.30 line was a tough line of resistance for the September rally. In addition to being a round number, it also served as strong support. It is now becoming more pivotal and a battleground. It is closely followed by 1.2960 which provided some support at the beginning of the year and also in September and October. 1.29 is a round number that also provided support when the euro was tumbling down back in May. 1.2814 was the peak of a recovery attempt in May and also capped the pair in September 2012. A slide lower in October 2012 almost met this line. 1.2750 capped the pair after the Greek elections and also had a similar role in the past. It is weaker now. 1.2670 was a double bottom during January and was the high line of the recovery before the Greek elections in June. It also capped the pair at the beginning of July 2012. 1.2624 is the previous 2012 low and remains important as also seen at the end of August, when it served as resistance. Below, 1.2587 is a clear bottom on the weekly charts but after holding the pair down for a while, but it is weak now. Long Term Downtrend Works Like a Charm The line starting from February at the 1.3486 peak was formed in March and April. The rally sent the pair surging through this level, as the graph shows. The pair flirted with this line again and again. the recent move towards this line proved to work again as sending the pair away from the line and higher. I am bullish on EUR/USD While a Spanish bailout request isn’t likely before October 21st), Spain could still surprise, especially if yields rise. In general, we can expect the EU Summit to help the euro, given such past events. Leaks towards the event and big statements at its end usually boost markets in the short term. Implementing decisions and making real progress are other things. In addition, the economic situation in Europe, including in the core, does not show positive signs, to say the least. So for this week, there is room for rises. Later, it doesn’t look that good. If you have interest in 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 AUD/USD Forecast October 15-19 Kenny Fisher 11 years Euro/dollar slid within the range in a week that saw a deterioration in the global mood. The upcoming week features the highly anticipated EU Summit among other events. Will we see progress with Spain and Greece? Here is an outlook for the upcoming events and an updated technical analysis for EUR/USD. Spain's credit downgrade by S&P added to the nation's troubles. The potential Spanish bailout request does not seem that close now. 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