Weekly Forex Outlook: EUR/USD – July 18-22

Euro/dollar had another interesting week. Apart from the ongoing debt crisis, there are many indicators this week. Here is an outlook for these events, and an updated technical analysis for EUR/USD.
After conformation Portugal, Ireland, Spain and Italy may also face credit rating downgrades. A default in Greece also seems more likely. If done in an orderly fashion, this could help the euro. Only 8 European banks failed the stress tests and 16 other barely passed. Is this serious? We will need to see the stock market’s reaction.
1. German PPI: Wednesday, 8:00am. After German wholesale prices dropped in a strong manner, also producer prices are likely to fall, after remaining unchanged last month. Inflation indicators point to an easing in pressures.
2. Consumer Confidence: Wednesday, 2:00pm. This is an official and quite solid figure from Eurostat. Pessimism is quite stable in recent month, with the score floating between -12 and -10. The number is likely to tick down from last month’s -10.
3. Flash PMI: Thursday. Begins in France at 9:00am, continues in Germany at 9:30am and ends with the figures for the whole continent at 10:00am. Numbers are separated between the manufacturing and services sectors. The numbers that were reported last month have shown a slowdown all over the continent. Some were revised to the downside in the final call. The initial numbers released now are likely to show another slide, but to remain above the critical 50 point level once again. The manufacturing sector is more vulnerable, with the all-European figure standing at 52. A shaky European morning is expected.
4. Current Account: Thursday, 10:00am. While Germany enjoys a big surplus, other European many other countries have deficits, and this is reflected in the current account for the whole euro-zone. May’s figures are expected to a similar deficit of 5 billion euros recorded in April.
5. German Ifo Business Climate: Friday, 10:00am. Contrary to the depressing ZEW indicator, IFO usually sees the sunny side. This wide survey of 7000 participants is expected to show another rise from last month’s 114.5 points.
6. Industrial New Orders: Friday, 11:00am. New orders for manufacturers have recovered last month after a big drop beforehand. No significant change is expected now.
* All times are GMT+2.

EUR/USD Technical Analysis
The Euro took a dive to a 4 month low at the wake of the new week, hitting 1.3838, a new line that didn’t appear last week. It managed to recover quickly, but remained constrained by the 1.4282 line, and traded in a lower range.1.4160 is now a pivotal line, where the euro traded around recently. Moving lower, the round number of 1.41 provides weak support.Just above the round number of 1.40, we find very important support at 1.4030. Lower, 1.3950 was a pivotal line when the pair traded in lower ranges and proved that it is of high importance. After its comeback, this line was another clear support line. The fresh bottom of 1.3838 will be closely watched in another fall. This was also a line of support last year.1.3570 worked as support at the beginning of this year, and will have the same role to play if the Euro falls that far. The last important line is 1.3440 that is very distinctive. It was a clear border between ranges, more than once in recent years. A break below will be a very bearish sign.
I remain bearish on EUR/USD.