EUR/USD had an uneventful week and was unchanged over the week. There are seven events in the upcoming week, including the ECB rate decision. Here is an outlook at the highlights and an updated technical analysis for EUR/USD. 

German CPI declined by 0.1%,the third decline in the past four months. Eurozone CPI fell by 0.2%, as deflation in the bloc remains a serious concern. Eurozone and German PMIs were in the low 50s, pointing to a slight expansion in the services and manufacturing sectors. Eurozone retail sales fell by 1.3%, missing the estimate of +1.3%. German Factory Orders gained 2.8%, after a huge gain of 27.9% beforehand.

German Industrial Production slowed to 1.2% in July, down from 8.9%. Eurozone Sentix Investor Confidence remained in negative territory, which points to pessimism. The indicator came in at -8.0, which was better than the previous reading of -13.4 points. Germany’s trade surplus improved to EUR 18.0 billion, up from EUR 14.5 billion. This marked a 5-month high. Eurozone for Q2 was revised to -11.8%, up from the earlier reading of -12.1%. THe ECB maintained interest rates, and sounded cautiously optimistic about the economy. In a follow-up press conference, ECB President Christine Lagarde said she was not concerned about the high value of the euro.

In the US, unemployment claims were worse than expected. The indicator was almost unchanged at 884,000, higher than the estimate of 838,000. Inflation remained weak, as consumer inflation slowed in August. Both the headline and core readings reading dropped from 0.6% to 0.4%. Still, both releases beat their estimates. The Producer Price Index, another important inflation gauge, also slowed in August.

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

1. Industrial Production: Monday, 9:00. Industrial Production dipped slowed to 9.1% in June, down from 12.4% beforehand. The indicator is expected to slow to 2.8% in July.
2. German ZEW Economic Sentiment: Monday, 8:30. Investor Confidence improved to 71.5 in September, up from 59.3. The forecast for September stands at 70.0.
3. Trade Balance: Wednesday, 9:00. The eurozone’s trade surplus improved in June to EUR 17.1 billion, up sharply from EUR 8.0 billion. The projected surplus in July is EUR 17.3 billion.
4. Final CPI: Thursday, 9:00. Inflation declined by 0.2% in August, as deflation remains a growing concern for ECB policymakers. Core CPI was stronger, with a reading of 0.4%. The final read will likely confirm the first one.
5. Current Account: Friday, 8:00. The current account surplus jumped to EUR 20.7 billion in June, up sharply from EUR 8.0 billion. We now await the July release.

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EUR/USD Technical analysis

Technical lines from top to bottom:

We start with resistance at 1.2174.

This is followed by 1.2107.

1.1974 is protecting the symbolic 1.20 level.

1.1877 is a weak resistance line.

1.1744 is the first support level.

1.1648 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 shown some improvement recently, but the euro remains at high levels. The pair’s direction could depend on how investors respond to the Federal Reserve rate announcement on Wednesday.