EUR/USD dropped for a second week in a row, due to the ECB’s cautious stance, among other things. Did the pair bottom out, or is there potential for more falls? Industrial and inflation data. Here is an outlook on the market-movers ahead and an updated technical analysis for EUR/USD. ECB president Mario Draghi was “not enthusiastic” about the return to growth, remaining cautious about recovery and keeping monetary policy unchanged. Underlying price pressures in the Eurozone are expected to remain subdued over the medium term. However Draghi also noted the positive trend of GDP growth in the second quarter supporting a gradual recovery in the euro-area. In the US, the weak Non-Farm Payrolls cast a shadow over the chances of QE tapering in September. Let’s start, [do action=”autoupdate” tag=”EURUSDUpdate”/]EUR/USD daily graph with support and resistance lines on it. Click to enlarge: Sentix Investor Confidence: Monday, 8:30. Euro zone sentiment improved in August amid stronger data indicating to an economic recovery in Euro states suffering from recession. Sentiment edged up to -4.9 from -12.6 in July, but lower than the -2.0 forecasted. Investors become more confident amidst the economic recovery in France as well as some southern European countries. The index on Germany the Eurozone’s locomotive, soared to 20.3 in August from 18.4 the previous month. A further improvement to -4.0 is anticipated. French Industrial Production: Tuesday, 6:45. French industrial output contracted unexpectedly by 1.4% in June, following a 0.3% drop in May, missing predictions for a 0.3% rise and contrasting some positive indicators released a few days earlier. Despite the positive direction the French economy took. Domestic demand is still muted. Output was weaker in the production of food and agricultural goods as well as in energy and mining. A gain of 0.7% is forecasted. German Final CPI: Wednesday, 6:00. Germany’s monthly inflation rose by 0.5% in June, the same as in the previous month and in line with consensus forecast. Meanwhile, Germany’s annual inflation soared 1.9% in July, its highest level since December 2012 due to rising food prices. The ECB wishes to keep the euro zone’s annual inflation rate at below 2% over the medium term. Monthly inflation is expected to remain unchanged. German WPI: Thursday. Germany’s wholesale price index declined unexpectedly by 0.3% in July, following a 0.4% fall in the previous month. Analysts expected prices to rise 0.2%. A rise of 0.2% is projected this time. French CPI: Thursday, 6:45. French consumer prices declined 0.3% in July from June amid low prices in the summer sales season as well as a seasonal fall in food prices. This reading was preceded by a 0.2% gain in June. Economists expected a smaller decline of 0.1% in July. An increase of 0.5% is forecasted. ECB Monthly Bulletin: Thursday, 8:00. The European Central Bank’s monthly Bulletin, released in August revealed the ECB sees a gradual recovery in the Eurozone for the rest of this year and continuing into 2014. It expects inflation to remain below the 2% target for the medium term, allowing the central bank to continue the easing measures in the current times to enable gradual growth. Industrial Production: Thursday 9:00. Manufacturing output among euro zone factories, increased by 0.7% in June, broadly in line with expectations, driven by a boost in durable goods production, providing further proof the Eurozone has exited recession. Analysts expected a bigger climb of 1.1%, however, compared with the same period last year, industrial production advanced by 0.3% in June after a 1.3% decline in May. Recovery, however, remains fragile since the jobless rate remains at record highs, despite a modest drop in June. A drop of 0.1% is expected now. Employment Change: Friday, 9:00. Despite modest improvements in the Eurozone economic indicators, the Euro-area employment situation is far from good. The Eurozone labor market contracted 0.5% in the first quarter, bringing levels to their lowest in seven years. A record 19.4 million people was registered in April, when unemployment reached its pick, according to Eurostat data. The worst situation is in Italy, Greece, Cyprus, and Portugal all drastically increased their jobless numbers. Another drop of 0.2% is expected now. Eurogroup Meetings: Friday. Eurogroup meetings attended by the Eurogroup President, Finance Ministers from euro area member states, the Commissioner for economic and monetary affairs, and the President of the European Central Bank will be held in Vilnius. The Eurogroup President welcomed the real progress made by the Greek authorities to meet the ECB requirements and the structural reforms implemented to increase competitiveness. He also stated additional support will be needed beyond the program. *All times are GMT EUR/USD Technical Analysis Euro/dollar started the week below the broken trendline (mentioned last week). It then continued lower, bouncing off the 1.31 level, before closing at 1.31. Technical lines from top to bottom: 1.37 was the 2013 peak, and is still far. 1.3590 capped EUR/USD back in February and is minor resistance. 1.3520 was a swing high in February, before the pair tumbled down. 1.3450 is the new peak of August 2013 and serves as the next resistance line. 1.3415 was the peak back in June and serves as a strong line of resistance, also after the break. 1.3350 provided support when the pair traded higher in February and weakens now. 1.33 worked as support during late August 2013 and remains relevant. It is followed by 1.3240, which capped the pair in April and also had a role in August. 1.3175 capped the pair during July 2013. The pair closed very close to this line, and it will be pivotal. 1.3100 is worked as temporary resistance in December 2012 and is becoming more important once again, after capping a recovery attempt in June and then in July and providing support in September. It is followed by 1.3050, which proved be strong support in May 2013, defending the round number in more than one occasion, but it is less significant now. The very round 1.30 line was a tough line of resistance. In addition to being a round number, it also served as strong support and recently worked as a pivot line. Uptrend support broken Since mid July the pair trading along an uptrend support line, which it touched three times but it now moved away from this line. The euro dipped below this line and remains below it. The breakdown served as a bearish sign. I remain bearish on EUR/USD The euro is getting no love from the ECB: with a more cautious tone and talk of a rate cut, the central bank is weighing on the pair. In addition, a third bailout for Greece seems inevitable and also Germany isn’t so strong, as industrial output showed. Despite the big disappointment in the NFP (especially in the participation rate), hints from the Fed points to tapering. It might not be in a big scale, but also $15 billion is a significant change of course. Tapering is not fully priced in yet. In order to hold back on tapering, perhaps only a big escalation is Syria is needed. More on EUR/USD: EURUSD Could Be Forming A Major Turning Point For The Year-Elliott Wave Analysis Inverse H&S On USD Index Suggests More Weakness On EURUSD If you are interested a different way of trading currencies, check out the weekly binary options setups, including EUR/USD and more. Further reading: 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 GBP/USD Outlook September 9-13 Kenny Fisher 9 years EUR/USD dropped for a second week in a row, due to the ECB's cautious stance, among other things. Did the pair bottom out, or is there potential for more falls? Industrial and inflation data. Here is an outlook on the market-movers ahead and an updated technical analysis for EUR/USD. ECB president Mario Draghi was "not enthusiastic" about the return to growth, remaining cautious about recovery and keeping monetary policy unchanged. Underlying price pressures in the Eurozone are expected to remain subdued over the medium term. 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