In the eurozone, manufacturing and services PMIs were within expectations. CPI slowed to 1.2%, down from 1.4% in the previous release. Germany posted some strong data – Retail sales rebounded with a gain of 0.9%, after a decline of 3.3%. Factory orders stormed back with a gain of 5.5%, following three straight declines.

In the U.S., the Federal Reserve shocked the markets with a dramatic rate cut. The Fed slashed rates by 0.50%, which was the first cut between meetings since 2008. At a press conference, Fed Chair Powell acknowledged the severity of the coronavirus threat and added that he expected the rate cut to boost the U.S. economy. The week wrapped up with sharp employment data. Nonfarm payrolls sparkled, climbing to 275-thousand in February, up from 225-thousand. This crushed the estimate of 175-thousand. Wage growth improved from 0.2% to 0.3%, while the unemployment rate dropped from 3.6% to 3.5%.

EUR/USD daily chart with support and resistance lines on it. 

1. German Industrial Production: Monday: 7:00. Germany’s industrial sector continues to sputter, as the indicator has posted three declines in the past four months. The December reading of -3.5% was particularly soft and missed the estimate of -0.2%. Analysts expect a strong rebound in January, with a forecast of 1.7%.
2. Sentix Investor Confidence: Monday, 9:30. Investor confidence slipped to 5.2 in February, down from 7.6 a month earlier. This figure missed the estimate of 6.1 points.
3. French Industrial Production: Tuesday, 7:45. The indicator slipped 2.8% in December, well off the estimate of -0.3%. Analysts expect a strong rebound in January, with a gain of 1.8%.
4. Eurozone Revised GDP: Tuesday, 10:00. Economic conditions in the eurozone remains weak, with growth of just 0.2% in the past two quarters. The estimate for Q4 stands at 0.1%.
5. Eurozone Industrial Production: Thursday, 10:00. The manufacturing sector sagged in December, with a sharp gain of 2.1%. However, investors are expecting a rebound in January, with a forecast of 1.4%. 
6. ECB Rate Decision: Thursday, 12:45. The ECB has been content to keep interest rates at zero since 2016 and no change is expected at the upcoming meeting. A dovish rate statement could put pressure on the euro.
7. German Final CPI: Friday, 7:00. Consumer inflation in the eurozone’s largest economy remains weak, as CPI has posted two declines in the past three readings. The January reading came in at -0.6%. Analysts expect a stronger showing in February, with an estimate of 0.4%.

EUR/USD Technical analysis

Technical lines from top to bottom:

With the euro posting strong gains last week, we start at higher levels:

• 1.1620 has held in resistance since early October. 1.1570 is next.
• 1.1515 was a high point at the end of January. 1.1435 was a low point at the beginning of February.
• 1.1290 is an immediate resistance line.
• 1.1215 is providing support. 1.1119 is next.
• 1.1025 (mentioned last week) has some breathing room after EUR/USD had another strong week.
• 1.0925 is the final support level for now.

I remain bearish on EUR/USD

The euro took advantage of the sharp rate cut by the Fed last week. However, the economic picture is much bleaker in the eurozone than in the U.S.; which should help the dollar rebound this week.