EUR/USD staged a late recovery on the EU Summit and managed to close the last week of Q2 on higher ground. What’s next? PMI data stands out in the first week of Q3. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

The EU Summit ended with an agreement on migration, something that provided relief for German Chancellor Angela Merkel, who faced a political crisis over the topic. Euro-zone inflation data diverged: the headline accelerated to 2% while the core figure dropped to 1%. In the US, there was relief on the trade front as the Trump Administration decided to go for a slightly softer approach to curbing Chinese investments. American data was mixed.

Updates:

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

1. Manufacturing PMI: Monday morning: 7:15 for Spain, 7:45 for Italy, final French numbers at 7:50, final German data at 7:55, and final euro-zone read at 8:00. Spain had a score of 53.4 in May, reflecting modest growth, only slightly above the 50-point threshold that separates expansion from contraction. A small increase to 53.6 is on the cards. Italy had 52.7 points and the score for June is projected to tick down to 52.6 points. According to the preliminary read for June, France had 53.1 points, Germany 55.9 and the euro-zone 55. The preliminary numbers are expected to be confirmed in the final read.
2. PPI: Monday, 9:00. Producer prices have remained flat in Apil, falling short of expectations. This gauge of inflation in the pipeline is now projected to rise by 0.4% in May.
3. Unemployment Rate: Monday, 9:00. The eurozone’s jobless rate stood at 8.5% in April, similar to levels seen in previous months and way below the high unemployment rate of over 12% seen in the height of the crisis. A repeat of the same level is on the cards now.
4. Spanish Unemployment Change: Tuesday, 7:00. The fourth-largest economy in the euro-zone still suffers from a high level of unemployment. This monthly indicator is volatile due to seasonal effects, but still noteworthy. After a drop of 83.7K in May, a bigger fall of 101K is projected for June.
5. Retail Sales: Tuesday, 9:00. The volume of sales rose in the past three months, but the increase in April was only a modest 0.1%. The same advance is on the cards now. It is important to note that Germany and France have already published their figures, somewhat diminishing the importance of the all-European publication.
6. Services PMI: Wednesday morning: 7:15 for Spain, 7:45 for Italy, final French numbers at 7:50, final German data at 7:55, and final euro-zone read at 8:00. Spain’s services sector PMI was an upbeat 56.4 points in May and is projected to edge down to 56.3 in June. Italy had 53.1 and is now projected to see 53.3 points. The preliminary read for France was 56.4, for Germany 53.9 and for the euro-zone 55. All the initial figures carry expectations for a confirmation now.
7. German Factory Orders: Thursday, 6:00. This gauge of the German industry is somewhat volatile. After a fall of 2.5% in April, a bounce worth 1.1% is on the cards for May.
8. Retail PMI: Thursday, 8:10. Markit’s measure for the retail sector has been showing meager growth in the past few months with a score of 51.6 in May. A similar level is likely for June.
9. Jens Weidmann talks: Thursday, 11:15. The President of the German Bundesbank and the leading candidate to succeed Mario Draghi at the helm of the European Central Bank will be speaking in Austria. The topic is the monetary union, and Weidmann may comment on current affairs as well.
10. German Industrial Production: Friday, 6:00. The second economic indicator for the German industry has also dropped in April by 1% and is projected to rise by 0.3% in June.
11. French Trade Balance: Friday, 6:45. France has a chronic, yet stable trade deficit. It stood at 5 billion euros in April and is forecast to widen to 5.1 billion

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar started the week by challenging the 1.1720 level (mentioned last week) before plunging to lower ground and recovering later on.

Technical lines from top to bottom:

1.2060 was the low point in late April and it is the last barrier before the round number of 1.20.

The round number of 1.19 is also notable as a pivotal line in the range and it also temporarily held the pair back in late 2017. 1.1845 was the high point in early June.

Further down, the 1.1820 level was a stubborn support line in late 2017. 1.1750 is a low point recorded in mid-May.

1.1720 is a veteran line that worked in both directions, last seen in November. 1.1676 was a temporary low point in late May.

Lower, 1.1630 was a pivotal line in November and 1.1550 was the trough around that time.

Below, 1.1510 is the new 2018 low and also a ten-month trough. Further down, 1.1480 served as support back in July 2017.

I remain bearish on EUR/USD

The problems of the euro-zone are far from being resolved. In addition, Trump trade concerns are here to stay and the recent move was only a short relief.