EUR/USD enjoyed another strong week and posted gains of 0.70%, coming close to the 1.20 level. This week’s events are the ECB rate decision and PMIs. Here is an outlook at the highlights and an updated technical analysis for EUR/USD.

Eurozone Retail Sales rebounded in February with a sizzling gain of 3.0%. This marked a 7-month high. German ZEW Economic Sentiment underperformed, slipping from 76.6 to 70.7 in April. This was well off the estimate of 79.1. Eurozone CPI posted a gain of 1.3% in March, up from 0.9% a month earlier.

In the US, CPI rose in March, but the reaction of the US dollar was muted. Headline CPI climbed from 0.4% to 0.6% and Core CPI improved to 0.3%, up from 0.1%. Retail sales soared in March – headline retail sales came in at 9.8% and the core reading rose 8.4%, well above the forecast.

EUR/USD daily chart with support and resistance lines on it. Click to enlarge:

1. ECB Rate Decision: Thursday, 11:45. The ECB is expected to maintain current policy. The market will be focusing on the rate statement and looking for any comments on inflation or the emergency pandemic program.
2. PMIs: Friday, 7:15 in France, 7:30 in Germany, and 8:00 for the whole eurozone. Manufacturing continues to show strong expansion. Germany is leading the way, and the estimate for the April Manufacturing PMI stands at 65.8. The estimate for the eurozone stands at 62.0. The services sector has been lagging behind, due to the ongoing lockdowns in Western Europe. The estimate is 51.1 for Germany and 49.1 for the eurozone. The 50-level separates contraction from expansion.

Technical lines from top to bottom:

We start with resistance at 1.2258, an important monthly level.

1.2089 has been a strong resistance line since the start of March.

1.1994 is an immediate resistance line.

1.1849 (mentioned last week) is the first support level.

1.1784 is next.

1.1664 has held in support since November 2020.

1.1585 is the final support level for now.

I am neutral on EUR/USD

The euro has posted strong gains of late, but has not been able to cross above the 1.20 level. The eurozone remains gripped by Covid, but the vaccine rollout is expected to speed up after a dismal performance so far.