Euro/dollar remained steady as the US was in the limelight and the debt crisis was on the back burner. Greece returns to center stage. Will a solution be found? Or is a fall awaiting us?. The main event this week is the rate decision. Here is an outlook for the upcoming events and an updated technical analysis for EUR/USD. Pressure is growing on Greece’s politicians to accept harsher measures regarding the labor market and to fully commit to them, also after the elections. Negotiations are at a sensitive point. In the US, the excellent jobs report lowers the chances of QE3 and provided hope for the whole world. It weakened EUR/USD. Updates: Negotiations between Greece and the troika are on a knife’s edge as both sides are losing patience. This sent the pair to a lower range. The pair remains in range as Greek politicians are trying to reach an agreement on painful cuts, while checking out default options. The drop of 2.9% in German industrial output hurt the pair. EUR/USD breaks above 1.3212, but doesn’t get to far. The pair enjoys serious progress in Greece combined with Bernanke’s disbelief – he dismisses positive US jobs growth. While Greece made progress, fresh German ideas such as postponing part of the bailout aid have slowed the pair’s progress, and limited it to the 1.3280 resistance line. The EU, and especially Germany, have little trust in Greece. The Hellenic Republic is requested to pass harsh measures before any aid is granted. But aid could come from the ECB, in a sleek move by Draghi. EUR/USD is under 1.3280 once again. EUR/USD daily graph with support and resistance lines on it. Click to enlarge: German WPI: Publication time unknown at the moment. Wholesales prices remained unchanged after two months of bigger changes: a rise of 0.7% and a drop of 1%. No big changes are predicted now. Sentix Investor Confidence: Monday, 9:30. This survey of 2700 analysts and investors has been in negative territory for the past 6 months. This reflects pessimism. Nevertheless, the score surprised by moving up to -21.1 points last month and is now predicted to advance to -14.6 points. German Factory Orders: Monday, 11:00. Europe’s No. 1 economy has seen 3 months of relatively strong changes in the value of orders. After a drop of 4.8% last month, a small rise of 0.5% is expected now. A bigger rise won’t be surprising after the sharp falls and given the history of this index. German Industrial Production: Tuesday, 11:00. Industrial output corrected a a rise of 0.8% two months ago and dropped by 0.6%. Another small drop of 0.1% is predicted now. The euro is sensitive to larger changes in this indicator. German Trade Balance: Wednesday, 7:00. Germany’s surplus counters the whole continent. After reaching 15.1 billion last month, the top end of the range seen in recent months, a drop to 14.1 is expected in the surplus. A weaker euro helps Germany’s export machine. Rate decision: Thursday, 12:45, with press conference at 13:30. There is a relatively low chance that Mario Draghi will cut the interest rate to 0.75%. Most economic indicators across the continent point to a recession, and a rate cut could help the economies. But the move will likely run into opposition, as 1% is the lowest rate ever, also during the worst days of the financial crisis. In addition, headline inflation is still above the 2% target, at 2.7%. It’s clear that for Draghi, headline inflation isn’t the “single needle in the compass”, but he will have a hard time convincing other members. Draghi takes pride in the LTRO operation that stabilized the banks. This will likely be the focus of the press conference, towards the next operation at the end of the month. German Final CPI: Friday, 7:00. According to the initial publication, prices fell by 0.4% in January. This will likely be confirmed now. A sharper fall in prices can trigger more pressure for cuts on Draghi. French Industrial Production: Friday, 7:45. Europe’s second largest economy enjoyed two consecutive months of growth in industrial output. The surprising rise of 1.1% seen last month will likely be corrected with a drop of 0.8% this time. * All times are GMT EUR/USD Technical Analysis Euro/dollar kicked off the week with a drop to the 1.3060 line before bouncing to the 1.3212 line (mentioned last week). Both lines were temporarily breached at times, but towards the end of the week, this turned into a perfect range. All in all, the pair ended the week a bit lower, at 1.3143. Technical lines from top to bottom: The round number of 1.38 capped the pair in September and also later on. It 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 minor now. Quite close by, 1.3280 had a similar role at the same time, and is stronger. 1.3212 held the pair from falling and switched to resistance later on. This is a key resistance line, as seen in February 2012. The 1.3145 line, which was the lowest point recorded in October 2011, is now a pivotal line in the middle of the range. 1.3060 was the top border of a very narrow range that characterized the pair towards the end of 2011. It is now key support on the downside after serving as the bottom border of the range. 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. Uptrend / Downtrend Channels Broken EUR/USD has now stabilized in flat range trading after the downtrend channel and later the uptrend channels have been broken. I turn from neutral to bearish on EUR/USD Time is running out. Greece is getting closer to default. It isn’t clear if the blame is on the Greek leg dragging or on the harsh pressure from the troika. As time passes by, a solution is further away and more money leaves Greek banks. Also with an orderly default, Portugal is just around the corner for following Greece’s footsteps. For the euro, one of the main drivers higher was the higher chance of QE3 in the US. With such a strong jobs report, the chances of dollar printing are now significantly lower. 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. 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: Trading the Canadian Ivey PMI Index Feb 2012 Kenny Fisher 11 years Euro/dollar remained steady as the US was in the limelight and the debt crisis was on the back burner. Greece returns to center stage. Will a solution be found? Or is a fall awaiting us?. The main event this week is the rate decision. Here is an outlook for the upcoming events and an updated technical analysis for EUR/USD. Pressure is growing on Greece's politicians to accept harsher measures regarding the labor market and to fully commit to them, also after the elections. Negotiations are at a sensitive point. 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