The Euro fell for a second week in a row as the Greek crisis outweighs everything else. Will we see more drops? The upcoming week consists of important inflation data among other events. Here’s an outlook for the European events, and an updated technical analysis for EUR/USD. The Euro-zone grew faster than expected in Q1, with Germany and France leading, and other countries behind. These widening gaps,see also in industrial production, weigh on the Euro, as no near resolution of the Greek crisis is seen, and contagion to other countries, such as Ireland, are being felt. The meeting of economy and finance ministers on Monday and Tuesday, is of high importance to the Greek crisis. A very decisive solution can boost the Euro, but there are more chances of indecision, that will further hurt the pair. These chances are now even lower with the arrest of IMF Chief Dominique Strauss-Kahn. Let’s start: EUR/USD daily chart with support and resistance lines marked. Click to enlarge: CPI: Monday, 9:00. Rising inflation, especially headline inflation pushed by commodity prices, has led to the rate hike and to pushing the Euro higher. The recent initial release for April was surprisingly high, at 2.8%. This will likely be confirmed at the final call. Core CPI is expected to be revised to the upside, from 1.3% to 1.5%, showing that there is some “second round effect” as Trichet says, that it’s not only commodities. This could provide some early recovery to the Euro. at the beginning of the week. A drop would lead to more falls, adding to Trichet’s softer stance on inflation. German ZEW Economic Sentiment: Tuesday, 9:00. This is one of the most important surveys in Europe. In the past three months, the 350 analysts and investors have disappointed, with scores that were lower than expected and were falling. Yet another drop is expected now, from 7.6 to 4.7 points. The less important all-European figure is likely to ease as well, from 19.7 to 17.9 points. German PPI: Friday, 6:00. Producer prices are also on the rise, together with commodity prices and CPI. An acceleration is expected in Europe’s largest country, from 0.4% to 0.6% this time. Current Account: Friday, 8:00. While Germany enjoys a huge surplus (as seen in the recent trade balance figure), the overall picture, including services and money, and for the whole Euro-zone, remains negative. The deficit is now expected to squeeze from 7.2to 6.5 billion. Consumer Confidence: Friday, 14:00. This official figure from Eurostat is negative as well – the survey of 2300 consumers is negative for a long time, and the recent release showed a drop from -11 to -12 points. A similar number is expected now. EUR/USD Technical Analysis Euro/Dollar continued downhill. The beginning of the week saw range trading that fell short of the 1.4450 line (discussed last week), and eventually saw the pair break down below 1.4160 and close at 1.4115, a weekly loss of about 200 pips. Technical levels, from top to bottom: 1.4775 was the support line of the tight range trading. 1.47 is a rather minor line, that only temporarily capped the pair on its way up. 1.4650 was a peak on the way up, and then switched to significant support. It is a distant resistance line now. 1.4580 was a line of resistance in the short stabilization period in the past week, and also in mid-April, and is a strong line of resistance now. 1.4520 was the bottom border of that range and an even stronger line, as it already worked as tough resistance a few weeks ago. Minor resistance is at 1.4450, which was an important line in the past, and had different roles beforehand. 1.4375 provided support a few weeks ago, and held the pair for a short period of time before the final fall. It’s now only minor resistance. The peak of November 2010 at 1.4282 is weaker than before, but is still an important line of resistance. 1.4160 was a swing high in the past, and also a swing low a few weeks ago, before the big surge to higher levels. It was shattered in the past week, first in a false break, but later in a decisive one. Just above the round number of 1.40, we find very important support at 1.4030 – this is a very distinctive line, as seen in the graph, and is now immediate support. Lower, 1.3950 was a pivotal line when the pair traded in lower ranges and is minor support now. More important support is at 1.3860, which worked in both directions earlier this year. 1.3750 is the next important line, serving as resistance back in January, and as an important line of support in February. 1.3570 worked as support at the beginning of the year, and will have the same role if the Euro falls that far. The last important line is 1.3440, that is very distinctive. It was a clear border between ranges, more than once in recent years. A break below will be a very bearish sign. Uptrend channel broken As you can see in the graph, an uptrend channel has accompanied the pair since the beginning of February, has been broken last week, and this was confirmed now. The uptrend support line is now a distant resistance line. I remain bearish on EUR/USD. Hopes for a quick resolution such a second bailout package to Greece (“Grease 2”) were erased, especially with the arrest of DSK. The Euro has so many reasons to fall. With commodity prices continuing to fall after Trichet’s blow, the dollar has more reasons to recover. These trends are likely to continue. This doesn’t look like a correction but like a downfall. Here are some additional recommended reads about EUR/USD: 8 Worrying Similarities between Ireland and Spain – how the same crisis characteristics appear in both troubled countries. FX Tech Strategy sees a halt to the long term uptrend in EUR/USD and a significant correction. Kathy Lien discusses the talk about the dollar finding a bottom in a TV interview. James Chen sees further downside for the Euro. Andriy Miraru provides weekly support and resistance lines for major pairs, including EUR/USD. TheGeekKnows writes a review of the past week looks forward. Further reading on Forex Crunch: 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 USD/CAD (loonie), check out the Canadian dollar For the Swiss Franc, see the USD/CHF 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 Outlook for May 16-20 Yohay Elam 12 years The Euro fell for a second week in a row as the Greek crisis outweighs everything else. Will we see more drops? The upcoming week consists of important inflation data among other events. Here's an outlook for the European events, and an updated technical analysis for EUR/USD. The Euro-zone grew faster than expected in Q1, with Germany and France leading, and other countries behind. These widening gaps,see also in industrial production, weigh on the Euro, as no near resolution of the Greek crisis is seen, and contagion to other countries, such as Ireland, are being felt. 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