After Euro/Dollar couldn’t break higher, it now expects a busy week. Here’s an outlook for the European events and an updated technical analysis for EUR/USD.
Axel Weber pushes the Euro higher, and he’ll have another chance to express his hawkish views this week. Will he help the common currency again? Let’s start:
EUR/USD daily chart with support and resistance lines on it. Click to enlarge:
- Industrial Production: Monday, 10:00. The level of production in the whole Euro-zone squeezed last month by 0.3% after a bigger rise beforehand. Industrial output has been better in Germany and France this month. As they already released their figures, we can now expect a faster rise of 0.4% this time.
- Axel Weber talks: Monday, 12:00. The president of the Bundesbank has quit the race for the president of the ECB, but still has strong influence on the currency, now that his tongue is free. He’ll make an official testimony in the German parliament in Berlin.
- French CPI: Tuesday, 6:30. In these times of rising inflation, also the Euro-zone’s second largest inflation becomes important. France saw prices dropping last month by 0.2%. A rise of 0.6% is predicted now.
- German ZEW Economic Sentiment: Tuesday, 10:00. The important survey of 350 analysts and investors always has a strong impact on the Euro. It began recovering a few months ago and has already risen from the negative numbers. Optimism is expected to rise once again, with the score rising from 15.7 to 16.2 points.
- CPI: Wednesday, 10:00. The initial, flash figures have shown that inflation remained above target, yet stable. The 2.4% (annualized) will probably be confirmed now. Core CPI is expected to be confirmed at 1.1%.
- German PPI: Friday, 7:00. Europe’s largest economy experienced a rather sharp rise in producer prices last month – 1.2%. The pace is expected to slow now to 0.7%.
- Current Account: Friday, 9:00. While Germany enjoys a big trade surplus, the rest of Europe has a deficit. But the current account deficit is expected to squeeze now from 13.3 to 10.6 billion, helping the Euro.
* All times are GMT.
EUR/USD Technical Analysis
Euro/Dollar made an attempt to break above the tough 1.4030 line (discussed last week). After the failure to break higher, the pair fell all the way to around 1.3760 before making an impressive last minute recovery and closing at 1.3900.
Looking up, initial resistance is found at 1.3950. This was a pivotal line when the pair was trading higher, and recently served as support. It’s followed by the stubborn 1.4030 line. While the round number of 1.40 is eyed by the ECB, triggering a comment by Trichet about “excessive volatility in currency markets, real resistance is only at 1.4030.
Higher above, the peak of 1.4160 is another minor line. It was a peak late in 2010. It’s followed by 1.4280 that is the highest level in a year and it’s getting further away at the moment.
Higher above, we see only levels reached in 2009 – 1.44 is the first line, followed by 1.4550, but this currently far away.
Looking down, immediate support is found at 1.3860. It was a strong line of resistance and the highest level in 2011 until being broken. It’s role has weakened now. Lower, 1.3760 just proved it’s importance now. It had the opposite role earlier this year.
Further down, 1.37 worked in both directions in recent months and is the next line of support. It’s followed by, 1.3570, a line which worked in both directions recently and now provides the next line of support.
Below we find a very important line – 1.3440. It worked in a very distinctive way in both directions, and recently cushioned a fall. Below 1.3440, we have minor support at 1.3334 and 1.3267. There are more lines below, but they are still not close enough.
I turn bearish on EUR/USD.
A bailout for Portugal is getting very close. While the markets still focus on pricey oil and a rate hike in Europe, the debt crisis will probably assume center stage quite soon.
Here are some more recommended reads for this pair:
- Is this week’s fall a healthy correction or is it something bigger? Some answers are provided in the EUR/USD Elliott Wave analysis.
- James Chen sees a tentative breakdown of the trend line.
- 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 EUR/USD, check out the Euro/Dollar forecast.
- 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.
Share
