EUR/USD dipped to new lows but eventually closed the week at similar levels to the previous week. While Greece avoided an immediate default, but the release of the aid tranche is still awaiting. Will the Eurogroup approve it now? This isn’t certain. Apart from the Eurogroup meetings, Flash PMIs, and the German Ifo Business Climate are the highlights of this week. Here is an outlook for the highlights of the week and an updated technical analysis for EUR/USD. Doubts about releasing aid for Greece come due to the public disagreement between the IMF and the EU, as the IMF wants EU governments to accept losses – some politically unacceptable. Could the IMF leave the Greek program? There are some signs.The euro-zone economies contracted again in the third quarter of 2012, officially entering a recession. GDP declined by 0.1% in light of the austerity measures in southern Europe and the weakening global economy. Germany and France continued growing, yet at a very slow pace. Updates: German PPI came in at a flat 0.0%, just below the estimate of 0.1%. The Eurogroup is meeting in Brussels today, with the Greek crisis at the top of the agenda. Germany’s deputy finance minister Steffen Kampeter downplayed expectations of a breakthrough, saying that a deal could possibly be reached this week. EUR/USD continues to edge upwards, as thee pair was trading at 1.2818. The German 10-year Bond Auction posted an average yield of 1.40%. This was lower than the previous yield of 1.56%. European PMI data was mostly positive, giving a boost to the euro. French Flash Manufacturing PMI came in at 44.7 points, better than the estimate of 44.1. French Flash Services PMI posted a reading of 46.1, slightly higher than the forecast of 45.3. German Flash Manufacturing PMI improved to 46.8, beating the estimate of 45.9. However, German Flash Services PMI came in at 48.0, lower than the forecast of 48.5. Euro-zone Flash Manufacturing PPMI came in at 46.2, beating the estimate of 45.6. Euro-zone Flash Services PMI dropped to 45.7, falling below the estimate of 46.1 points. A two-day EU Summit starts on Thursday, with leaders trying to reach an agreement on the Euro-zone’s 2014-2020 budget. The Spanish 10-year Bond Auction produced on average yield of 5.52%. This was up slightly from the previous auction, which had an average yield of 5.46%. Euro-zone Consumer Confidence will be released later on Thursday, with the markets bracing for another very weak reading. The euro continues to improve, as it testing the 1.29 line. EUR/USD was trading at 1.2893. EUR/USD daily graph with support and resistance lines on it. Click to enlarge: Jens Weidmann speaks: Monday, 10:30. The German Bundesbank President Jens Weidmann is scheduled to speak in Frankfurt. His words can create volatility in the market, especially if he says something relatively dovish. Weidmann opposes the OMT. German PPI: Tuesday, 7:00.Germany’s manufacturers output prices increased by 0.3% in September compared to a 0.5% rise on August. The increase was in line with predictions. PPI excluding energy, also increased by 0.3%. A 0.2% increase is expected now. Eurogroup Meetings: Tuesday. The last Eurogroup meeting concluded with a resolution to provide Greece with some breathing space, granting a two-year extension to its fiscal adjustment program. The eurogroup will further discuss ways to aid Greece on 20 November. The EU was pleased with the Greek reform in the pension age increase to 67 which ensures its viability, But is disagrees with the IMF over the sustainability of the debt. Flash PMI’s: Thursday. According to the PMIs, the euro zone economy continues its fall into a recession with growing concerns over its recovery prospects. French Flash Manufacturing PMI increased slightly to 43.5 from 42.7 in September, missing forecasts for a 44.0 reading. Exports continue to weaken, in light of a slowdown in Asia. Meanwhile French service sector increased to 46.2 in October, compared to 45.0 in the preceding month. Next up is Germany, in danger of being dragged down by its weaker neighbors, posting further declines in its Manufacturing PMI, down to 45.7 from 47.4 in September and in its service sector, dropping to 49.3 in October from 49.7.Europe is expected to become a financial burden on world economy next year with growing concerns over its debt sustainability. Its Manufacturing PMI fell to 45.4 in October from September’s 46.1 and a slight increase in its service PMI, up to 46.2 from 46.1 in September. French Flash Manufacturing PMI is expected to rise to 44.1 while the service PMI is forecast to reach 45.3. German Flash Manufacturing PMI is expected to drop to 45.9 while service PMI to 48.5. The Eurozone Flash Manufacturing PMI is predicted to reach 45.6 while Service PMI is forecast to reach 46.1. EU Economic Summit: Thursday-Friday. EU Economic Summit held in October focused entirely on the Multiannual Financial Framework (MFF) for the 2014-2020 budget. The members agreed about its goals such as contribute to growth, investment and jobs, but differed on the details. Several members asked for a bigger budget to which Britain and Germany opposed threatening to block MFF talks if their interests are not addressed. If at this point, there is no agreement on Greece, the debt struck country will dominate the agenda. Consumer Confidence: Thursday, 15:00. Euro zone consumer confidence improved modestly in October, up to -25.6 points in October from -25.9 points in September. Although households represent half of the euro zone’s economic output, they cannot bail out the eurozone since the debt crisis reduces their disposable income. Economists believe a recovery may only come in mid-2013. No change is forecasted. German Final GDP: Friday, 7:00. The German economy grew by 0.2% in Q3 according to the initial publication. This exceeded expectations of a 0.1% growth rate, yet there are fears that Germany’s economy is contracting in the fourth quarter, as PMIs so far are showing. The final publication is expected to confirm the initial data. German Ifo Business Climate: Friday, 9:00. The Ifo Business sentiment of manufacturers and wholesalers for industry and trade continued to drop falling to 100 in October, from 101.4 in September, declining for the sixth consecutive month. All measures came below expectations, contrary to predictions of a slight rebound to 101.5. Another drop to 99.6 is forecast now. A loss of a digit is also a psychological blow. Belgium NBB Business Climate: Friday, 14:00. Confidence among Belgian businesses dropped unexpectedly in October reaching -13.5 from -11.6 in September. Analysts expected Belgium NBB Business Climate to rise to -10.8. All times are GMT. EUR/USD Technical Analysis â‚¬/$ started the week sliding on the downtrend channel (discussed last week). It then recovered and flirted with the 1.28 resistance line before retreating and closing at 1.2742. Technical lines from top to bottom: 1.3170 worked very well as a double top during September 2012 and is now the top frontier of the range. A failure to get closer to this line shows that the pair has limited momentum. 1.3140 was the high of October and is minor resistance before 1.3170. 1.3080 capped the pair in September and then again in October. 1.3030 provided some support at the same period of time. Both are minor in comparison with the next line. The very round 1.30 line was a tough line of resistance for the September rally. In addition to being a round number, it also served as strong support. It recently worked as a battleground and the pair is now well below this line. It is closely followed by 1.2960 which provided some support at the beginning of the year and also in September and October – the line is weaker now. 1.2880 provided some support in October and now switches to resistance. It proved to be a backstop on the initial false rally after Obama’s victory. 1.28 is the bottom border of the range, and was eventually left behind. The pair fell to this low in September and later got close to it. 1.2750 capped the pair after the Greek elections and also had a similar role in the past. It is now a pivotal line in the range. 1.2690 was the new low after the November breakdown, and also provided support on a second downfall attempt in November 2012. 1.2624 was the low in January and now serves as weak support,1.2590 was a cap during August, before the pair surged. Below, the round number of 1.25 is not only of high psychological significance (USDEUR 0.80) but also worked as support during the summer of 2012. 1.2440 is already a stronger line, that was a clear separator during August. Below, 1.2390 was resistance in July. 1.2250 is lower support, also at that time. 1.2140 is a very strong line that separated the low range from the rest, and the 2012 low of 1.2042 is the last line for now. Downtrend Support Strengthening The clear break of the narrowing channel to the downside, led to a continued downfall. We can now begin seeing the pair trading along downtrend support, that began in mid-October, and the recent slide showed that this pair is strong. The pair had a week of consolidation. We could see a resumption of downfalls now. More technical analysis from James Chen: EUR/USD Strong Bearish Bias Continued I turn from neutral to bearish on EUR/USD The divide between the EU and the IMF is quite serious, and Germany may face a tough choice: losing money via debt restructuring (aka OSI) or a disorderly haircut via a Grexit. A release of the next tranche is partially priced in, so there is downside risk here. In addition, PMIs will likely continue weighing on the pair, as well as the clash between Israel and Hamas, which is already being felt in currencies. In the US, the positive tone from the fiscal cliff negotiations is currently dollar negative, yet there is still a long time until we will see some kind of deal reached. Here is all you need to know about the cliff. More on Greece: 5 Reasons Why Greece Could Leave the Euro-Zone After the US Elections How to trade the Grexit with EUR/USD If you have interest in a different way of trading currencies, check out the weekly binary options setups, including EUR/USD 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. 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 USD/JPY Outlook November 19-23 Anat Dror 10 years EUR/USD dipped to new lows but eventually closed the week at similar levels to the previous week. While Greece avoided an immediate default, but the release of the aid tranche is still awaiting. Will the Eurogroup approve it now? This isn't certain. Apart from the Eurogroup meetings, Flash PMIs, and the German Ifo Business Climate are the highlights of this week. Here is an outlook for the highlights of the week and an updated technical analysis for EUR/USD. 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