Euro/dollar dropped to the lowest levels in this month before making a correction in a very choppy week. If everything goes well, the current chapter in the Greek saga will be sealed with the launch of the second bailout program. Later, PMIs and an important German survey are the highlights . Here is an outlook for the upcoming events and an updated technical analysis for EUR/USD. The euro-zone contracted in Q4, as expected. Nevertheless, the contraction is lower than expected, at 0.3%, and France surprised by posting growth. Purchasing managers’ indices will shed light on the current economic situation. Will the recession be mild? Please vote for Forex Crunch in FXStreet’s Forex Best Awards. Click on the yellow bar on top to participate. Updates: Greece approves budget cuts, but there is strong talk that Germany wants Greece to declare bankruptcy. There are 5 reasons for a delay in the bailout agreement, or for a full cancellation. This may send the euro plunging. There are more signs that a Greek bankruptcy announcement is coming. The key is the “secret troika report”. EUR/USD opened the week higher, and bounced off the 1.3212 line. This comes despite very heavy doubts about a deal being reached for Greece today. Finland already talks about March 12th as a possible date for decision. EUR/USD reached resistance at 1.3280 and bounced from there. The meeting is going on longer than expected, and this is worrying. Greek Second Bailout Deal Reached after 13 hours of negotiations. EUR/USD is rallying in a limited manner, capped by resistance. EUR/USD remains in range as doubts remain. A hard Greek default could send the pair plunging. Calm in Greece and strong German IFO Business Climate sent the pair higher, to fresh 2012 highs. How long will this optimism last? See how to trade the US jobless claims with EUR/USD. EUR/USD daily chart with support and resistance lines on it. Click to enlarge: Decision on Second Greek Bailout: Monday. Expectations are high for this meeting, delayed from Wednesday. The second Greek bailout is expected to be signed off, with bond swaps beginning afterwards. The last touches for the deal are being made, and things could always go wrong, as we’ve seen too many times in the past. There are worrying signs that the deal could be delayed (or cancelled altogether). The ECB already began preparing for this, by exchanging its bonds to avoid potential Collective Action Clauses that will be part of the PSI. Consumer Confidence: Tuesday, 15:00. This official figure from Europe’s statistic agency Eurostat has been very stable in recent months, sliding slowly in negative ground. The pessimistic atmosphere will likely prevail for another month, with the score seen at -20, one point higher than last month. French CPI: Wednesday, 6:30. A surprise was seen last moth, when consumer prices rose by 0.4% in Europe’s No. 2 economy. A smaller rise is predicted now, of 0.3%. Flash PMIs: Wednesday. Begins in France at 8:00, continues in Germany at 8:30 and ends for the whole euro-zone at 9:00. Purchasing managers’ indices have found a bottom according to Markit. The situation in the services sector is better than then the manufacturing one. The all-European services sector is growing once again, with the PMI at 50.4 points. It might slide back under 50 – back to contraction. The manufacturing sector is lagging. Here, the figure for all the euro area will likely tick up from 48.8 points. Germany enjoys growth in both sectors, while France currently reflects the all-European trend: services growth and manufacturing contraction. France and Germany are expected to improve. Industrial New Orders: Wednesday, 10:00. The total of value of orders is quite erratic of late. After a rise of 1.5% last month, orders dropped by 1.2%. The see-saw is expected to continue with growth this time, of a moderate scale, 0.6%. Belgian NBB Business Climate: Wednesday, 14:00. This 6000 strong survey from the core of Europe has been improving lately, rising to -9.5 points last month. This is still in negative territory, reflecting deteriorating economic conditions. Another tick up is expected now to -7.9 points. German Ifo Business Climate: Thursday, 9:00. Germany’s No. 1 think-tank printed three months of improvement in its benchmark indicator, after a few months of drops. After the usually-pessimistic ZEW institute surprised with a positive figure, IFO is also likely to print a higher score than last month’s 108.3 points and edge up to 108.6. German Final GDP: Friday, 7:00. The first release of German GDP for Q4 was a bit better than expected – a contraction of 0.2%. This will likely be confirmed now. An upwards revision cannot be ruled out, especially after France surprised with growth in Q4. * All times are GMT EUR/USD Technical Analysis Euro/dollar started off the week with an attempt to break the previous battleground of 1.3280 (mentioned last week). When this attempt failed, the pair began falling gradually and eventually dipped under 1.30. A strong recovery saw the pair rise to touch 1.32 before closing at 1.3139, around 60 pips lower than last week. Technical lines from top to bottom: In case things go really well, a high point is worth mentioning. 1.38, that stopped the pair in September and also later on is weak and distant resistance. 1.37 had a similar role at the same time and also worked as support afterwards. It is stronger resistance. 1.3615 switched from support in October to support in November and is now resistance. 1.3550 capped the pair in November and December and marked the beginning of the plunge. 1.3450 was support in November and then switched to minor resistance. It used to be a stronger line, but is only minor now. 1.3330 provided some support for the pair during December 2011 and is a stronger line now. EUR/USD got close to it in February 2012. Quite close by, 1.3280 had a similar role at the same time, and is gaining strength once again, after having better success at capping the pair in mid February. 1.3212 held the pair from falling and switched to resistance later on. It remains a key resistance line, as seen more than once in February 2012. 1.3150 is the updated version of the 1.3145 line, after the recent choppiness. The lowest point recorded in October 2011, is now a pivotal line in the middle of the range. 1.3050 is the updated version of 1.3060, which was the top border of a very narrow range that characterized the pair towards the end of 2011. It is now serious support on the downside after serving as the bottom border of the range and despite a temporary move under this line. The round number of 1.30 is psychologically important but is much weaker now. It was a pivotal line before Bernanke’s rally. The 1.2945 line is stronger once again and still provides support. 1.2873 is the previous 2011 low set in January, and it returns to support once again. This is a very strong line separating ranges. 1.2760 is a pivotal line in the middle of a recent range. It provided support early in the year. 1.2660 was a double bottom during January and the move below this line is not confirmed yet. 1.2623 is the current 2012 low, but only has a minor role now. A more important line is 1.2587, the trough of August 2010. This line will be closely watched on any move downwards. A break below this line will send the pair to levels last seen 18 months ago. I remain bearish on EUR/USD In the best case scenario, the second bailout will be approved and the PSI will go through. There are too many moving parts and too many possible points of failure, in Berlin, Athens, Brussels, the ECB, and among the bondholders. Even so, this is already priced in, and there’s little reason to cheer. Greece is likely to continue missing targets and requiring adjustments. Without a plan for growth, the debt load will continue weighing on it. Portugal is in a better situation and his doing more to comply with the EU. Yet this compliance can bring it down as well. On the other side of the pond, the situation continues improving, especially in jobs. If you have interest in a different way of trading currencies, check out the weekly binary options setups, including EUR/USD, GBP/JPY 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. For the New Zealand dollar (kiwi), read the NZD forecast. For the Swiss Franc, see the USD/CHF forecast. USD/CAD (loonie), check out the Canadian dollar forecast. 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EUR/USD ForecastMajors share Read Next USD/JPY Outlook February 20-24 Anat Dror 10 years Euro/dollar dropped to the lowest levels in this month before making a correction in a very choppy week. If everything goes well, the current chapter in the Greek saga will be sealed with the launch of the second bailout program. Later, PMIs and an important German survey are the highlights . Here is an outlook for the upcoming events and an updated technical analysis for EUR/USD. The euro-zone contracted in Q4, as expected. Nevertheless, the contraction is lower than expected, at 0.3%, and France surprised by posting growth. Purchasing managers' indices will shed light on the current economic situation. 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