EUR/USD started the week lower and could never recover. Expectations are higher for new policy measures from the ECB. Will Draghi deliver? Apart from the ECB, we have PMIs and some interesting German data . Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD. Draghi’s dovish words in Jackson Hole shaped the whole week: with the ECB worried about inflation expectations and signalling action, the euro began lower and stayed lower. Euro-zone inflation data was mixed, with the headline figure falling lower as expected and the core figure ticking up. Other figures looked worse: German business climate dropped more than expected, unemployment rose and retail sales fell in the euro-zone’s powerhouse. In the US, data has been mostly positive with an upgrade of Q2 GDP growth to 4.2% (annualized) and the strongest consumer confidence since 2007, but the path is still long. [do action=”autoupdate” tag=”EURUSDUpdate”/]EUR/USD daily graph with support and resistance lines on it. Click to enlarge: German Final GDP: Monday, 6:00. According to the initial publication, the German economy squeezed by 0.2% in Q2 after an excellent first quarter. This disappointment will likely be confirmed. Revisions are not common here. Manufacturing PMIs: Monday morning. Spain, the euro-zone’s fourth largest economy, is expected to enjoy continued growth with 53.4 points in the purchasing managers’ index in August, slightly lower than 53.9 points beforehand. It is published at 7:15. Italy, at 7:$5, is expected to see a slide from 51.9 to 51 points. The zone’s third largest economy is suffering a recession. At 8:00, the final manufacturing PMI for the euro-zone is expected to stand at 50.8, confirming the initial publication. Spanish Unemployment Change: Tuesday, 7:00. After a few surprisingly strong months, Spain disappointed by shedding only 29.8K unemployed in July. A rise of 25.5K is expected now. Note that this number is not seasonally adjusted, and Spain’s strong tourism sector is very seasonal. PPI: Tuesday, 9:00. Producer prices are not going anywhere fast. After a rise of 0.1% in June, a flat read is expected for July. Year over, prices are falling. Services PMIs: Wednesday morning. At 7:15, Spain is expected to see a slide from 56.2 to 55.5 points in this sector. Italy, at 7:30, is likely to see a drop from 52.8 to 51.7 points. The final services PMI is expected to confirm the first read of 53.5 points. Note that this sector is in a better condition. France has a gap between a squeezing manufacturing sector and a growing services one. Retail Sales: Wednesday, 9:00. The volume of sales grew in the past two months, but this will probably come to an end with a squeeze of 0.2% in July. Looking at the dismal German fall of 1.4%, it is hard to see the zone as a whole rising. German Factory Orders: Thursday, 6:00. The zone’s locomotive disappointed badly with a plunge of 3.2% in factory orders in June. This caused a lot of worry. A rebound at the size of 1.6% is now expected. Retail PMI: Thursday, 8:10. This relatively overlooked PMI showed a contraction in the retail sector, with 47.6 points in July. A similar figure is likely for August. Rate decision: Thursday 11:45, press conference at 12:30. Mario Draghi dropped the bomb in Jackson Hole, by acknowledging that low inflation is not only temporary, and that inflation expectations are falling. This raises expectations for action in September’s meeting. However, Draghi is likely to look for a wider consensus, especially from his German colleagues. In addition, the TLTROs come into effect this month, and this could lead the governing council to wait. The not too horrible inflation numbers are also a reason to wait now. Nevertheless, we can expect heavier hints about QE and more pressure to keep the euro down, if not even lower. Some also expect another rate cut, but this is unlikely now. Draghi’s words are set to rock the markets. German Industrial Production: Friday, 6:00. Industrial output hardly grew in June: only 0.3%, joining the disappointment from factory orders. A stronger growth rate is expected for July: 0.5%. Revised GDP: Wednesday, 9:00. The economic output of the euro area ground to a halt in Q2 according to the first release. A confirmation of this number is expected now, despite strong Spanish GDP. * All times are GMT EUR/USD Technical Analysis Euro/dollar started the week with a weekend gap, and never closed it. It found support at 1.3175 (mentioned last week). It then fell even lower, but managed to recover back to range, under 1.32. Live chart of EUR/USD: [do action=”tradingviews” pair=”EURUSD” interval=”60″/]Technical lines from top to bottom: 1.3585 served as the bottom of the range and still carries weight despite the breakdown in June. 1.3550 worked as support in January but is now weakening. The round number of 1.35 worked as the last cushion in June and is strong also due to the roundness. 1.3450 worked as resistance in August 2013 and as support in September and October. It is now a key line on the upside. The 1.3415 level managed to cap the pair in August and serves as a barrier before 1.3450. Below, the next line of support is only at 1.3333, a level that worked as a cushion to the pair during August and just above 1.3325 that separated ranges back in September 2013. 1.3295 is the next line: it was the low level in November. 1.3220 is the pre-gap line and now serves as important resistance. 1.3175 worked in both direction during 2013 and served as the bottom line of the range in August 2014. 1.3150 is the fresh 2014 low and serves as a yearly low as well. Below, the round number of 1.31 served as resistance several times, and the all important figure below is 1.30. Even below 1.30, we find support at 1.2940, which had a role back in 2013. Broken downtrend support As the thick black lines on the chart show, the pair broke below the downtrend support and left the channel. Downtrend resistance, that begins from the near 1.40 peak and was mentioned here before is quite far from the line at the moment. Downtrend support accompanies the pair from May and was formed in June. I remain bearish on EUR/USD It is hard for any pair to fall week after week, but there are good reasons to expect more: despite the rise in core inflation, Draghi will probably keep his leg on the euro’s head. After he explained why the fundamentals of a lower euro are in place, he would probably like to push it even lower. In addition, the German weakness could allow him more breathing space. In the US, GDP was a reminder of strong growth and we will probably now get a reminder of nice job growth via the NFP. Listen to a preview of September’s big events in the latest episode of Market Movers: Download it directly here. 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/CAD Forecast Sep. 1-5 Yohay Elam 8 years EUR/USD started the week lower and could never recover. Expectations are higher for new policy measures from the ECB. Will Draghi deliver? Apart from the ECB, we have PMIs and some interesting German data . Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD. Draghi's dovish words in Jackson Hole shaped the whole week: with the ECB worried about inflation expectations and signalling action, the euro began lower and stayed lower. Euro-zone inflation data was mixed, with the headline figure falling lower as expected and the core figure ticking up. 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