EURUSD Update

advanced to a new 6 month high but eventually retreated back to range. Can it continue advancing? German Ifo Business Climate, employment data as well  as German inflation data are the main events on our calendar this week. Here is an outlook on the main market-movers and an updated technical analysis for EUR/USD.

Last week German and Eurozone PMIs proved once again that the Eurozone is out of recession. Germany beat expectations with strong Services and Manufacturing PMIs leading the euro-zone to expansion. The main disappointment came from France with weaker than expected PMI readings. However all in all, the euro-area is on the right direction. In the US, the FOMC meeting minutes strengthened the notion that tapering is coming, but not all is well in the US. 

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1. German Ifo Business Climate: Tuesday, 8:00. German business confidenceincreased for the third consecutive month in July, reaching 106.2 from 105.9 in June, slightly lower than the 106.3 forecasted by analysts. The recent upbeat suggests German economy is recovering. German unemployment unexpectedly dropped in June and was the first euro-area manufacturing to show expansion in two years in July. Business climate is expected to reach 107.1 this time.
2. GfK German Consumer Climate: Wednesday, 6:00. German consumer sentiment soared to a fresh six-year high in July, rising to 7.0 points from 6.8 in June, higher than the 6.9 reading projected by analysts. This rise was aided by robust employment and a moderate inflation boosting consumption and growth. However Germany’s recovery will have its setbacks due to persistent recessions in fellow Euro-area countries. A further rise to 7.1 is forecasted.
3. German Import Prices: Wednesday, 6:00. Germany’s import prices continued to decline in June, falling 0.8% compared with a 0.4 percent fall in May. The reading missed predictions for a 0.4% gain. On a yearly base, import prices declined 2.2% in June, following a 2.9% drop in May. The pace of decline, however, was the tamer in four months. A gain of 0.3%  is anticipated now.
4. M3 Money Supply: Wednesday, 8:00. The Eurozone seasonally adjusted annual M3 index dropped to 2.3%in June compared to 2.9% in May, missing analyst’s median estimates of 3.0%. A 2.0% rise is predicted this time.
5. German CPI: Thursday. Preliminary data revealed inflation increased by 0.5% in June due to higher food costs attributed to a cold winter, floods which swept through eastern and southern Germany in June and a heat wave. The rise was higher than the 0.3% increase anticipated and followed a 0.1% gain in May. A further rise of 0.2% is expected.
6. German Unemployment Change: Thursday, 7:55. The number of unemployed in Germany dropped unexpectedly by 7,000 in July, leaving unemployment rate close to its lowest level since the Eurozone formation. The improvements in hiring and salaries indicate private consumption will continue to support growth in the coming months. Another drop of 5,000 unemployed is anticipated.
7. German Retail Sales: Friday, 6:00. German retail sales fell by 1.5% in June, the biggest drop this year. Household spending failed to boost growth in the second quarter. On an annual basis, the retail sales fell 2.8%, their largest drop in 2013. This decline was preceded by a 0.7% gain in the previous month. Nevertheless, consumer confidence remained strong. A gain of 0.5% is forecasted.
8. Italian Monthly Unemployment Rate: Friday, 8:00. Italy’s unemployment rate remained near a record high in June with a mild drop to 12.1% from 12.2% in May. Companies did no hiring amid the country’s recession. The reading was worse than the 12.3% estimated; unemployment remained above 10% for a 17th month. Italian Government plans to pass a second package of measures for youth employment later this year to boost hiring. A rise to 12.2% is projected.
9. CPI Flash Estimate: Friday, 9:00. The Eurozone inflation rate reached 1.60% in July according to market predictions. The main components measures for the CPI Index include: food, alcohol and tobacco, energy, non-energy industrial goods and services.
10. Unemployment Rate: Friday, 9:00. The eurozone labor market continues to suffer a large scale unemployment and rampant youth joblessness. The number of unemployed declined slightly in June but unemployment rate remained unchanged at 12.1%. Analysts expected a worse reading of 12.2%. However, June’s small drop in unemployment can also mean a turn for the better for the Eurozone’s beaten economy   by fxcrunch