EUR/USD gained close to 1.0% last week as the euro closed above the 1.19 line. There are six events in the upcoming week, including PMIs and inflation. Here is an outlook at the highlights and an updated technical analysis for EUR/USD. 

German GDP declined by 9.7% in Q2, revised upwards from 10.1% in the initial estimate. France also recorded a dismal GDP in Q2, with a decline of 13.8%. German Ifo Business Climate rose for a fourth straight month, to 92.6 in August. This was up from 90.5 beforehand.

Over in the US, Conference Board Consumer Confidence slipped to 84.8, down from 91.7 beforehand. Durable Goods Orders were mixed – the headline reading accelerated 11.2%, up from 7.3% in the previous release. However, the core release slowed to 2.4%, down from 3.3% beforehand. US second-estimate GDP was upwardly revised to 31.7%, compared to 32.9% in the initial release.

Federal Reserve Chair Jerome Powell made a dramatic address at the Jackson Hole meeting. Powell said that the Fed would allow inflation to overshoot its inflation target of 2.0%. This significant shift in policy means that interest rates will likely stay very low for the foreseeable future. This resulted in broad losses for the US dollar last week.

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

1. German Inflation: Monday, All Day. German CPI is projected to come in at 0.0%, pointing to weak economic activity. The previous release came in at -0.5%.
2. Manufacturing PMIs: Tuesday, 7:15 for Spain, 7:45 for Italy, final French figure at 7:50, final German one at 7:55, and final euro-zone number at 8:00. German, Italian, and Spanish PMIs are projected to come in the low 50's, as is the all-eurozone index. This points to slight expansion. The French release is expected at 49.0, just shy of the 50-mark, which separates expansion from contraction.
3. Eurozone Inflation: Tuesday, 9:00. Inflation is expected to slow in August. The headline figure is projected to fall to 0.2%, down from 0.4%. The core release is projected to drop from 0.9%, down from 1.2%.
4. German Retail Sales: Thursday, 9:00. The eurozone’s largest economy declined by 1.6% in June. The indicator is expected to rebound in July, with a forecast of 0.5%.
5. Service PMIs: Thursday, 7:15 for Spain, 7:45 for Italy, final French figure at 7:50, final German one at 7:55, and final euro-zone number at 8:00. Services PMIs showed weak expansion. The German index is forecast at 50.8 and the French indicator at 51.9. The Italian index is projected at 50.0 and the all-eurozone PMI at 50.1, which is indicative of stagnation. The Spanish PMI is expected at 48.0, showing contraction.
6. German Factory Orders: Friday, 6:00. Factory orders sparkled at 27.9% in June, after a gain of 10.4%. The estimate for July stands at 5.1%.

EUR/USD Technical analysis

Technical lines from top to bottom:

• We start with resistance at 1.2174.
• This is followed by 1.2053.
• 1.1958 is protecting the symbolic 1.20 level.
• 1.1844 is the first line of support.
• 1.1723 is next.
• 1.1652 has held in support since late July.
• 1.1573 (mentioned last week) is the final support line for now.

I am neutral on EUR/USD

The US dollar has retreated against the major currencies, but the greenback could rebound on profit-taking. There are concerns for investors on both sides of the pond. The US Congress remains deadlocked over a massive fiscal stimulus package, while the eurozone economy continues to struggle in the wake of COVID-19.