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During the past couple of weeks, the EUR/USD has been continuously facing resistance below 1.3300, after one brief break over it when it managed to touch 1.3308. Recent economic releases reflect a neutral outlook for the currency pair. The recent economic data (from the last week) has been as follows:

Last week's economic releases from the eurozone:

EU: Sentix Investor Confidence: -7.0 and positive as compared to the forecasts (-15.0) as well as the previous -16.8.

EU: Producer Price Index: Year on year change 2.1%, negative as compared to the forecasts (2.4%) as well as the previous 2.6%. Same with the month on month change of -0.2% against the consensus of 0.0% and the previous 0.1%.

EU: German Trade Balance: EUR 14.6B, negative as compared to the forecasts (EUR 15.0B) as well as the previous 14.9B Euro.

EU: Consumer Confidence: -26.5, positive as compared to the forecasts (-26.6) as well as the previous -26.9.

EU: Retail Sales: Year on year change -2.6%, positive as compared to the forecasts (-2.7%) as well as the previous -3.2%. Month on month change was 0.1% and though it was less than the forecasts of 0.3% but quite better than the previous -0.7%.

EU: Unemployment Rate: Increased to 11.8% from the previous 11.7%. The consensus was also for 11.8%.

EU: German Factory Orders: Year on year change -1.0% against the previous -2.5%. Month on month change was -1.8% and negative as compared to the forecasts (-1.4%) as well as the previous 3.8%.

EU: Gross Domestic Product (q/o/q): -0.1% and though same as the consensus but better than the previous -0.2%.

EU: German Industrial Production: Year on year change was -2.9% against the previous -3.0%. The month on month change was 0.2% and though less than the consensus of 1.0%, it was quite better than the previous -2.0%

EU: Interest rates stayed the same at 0.75%.

Last week's economic releases from the U.S.:

U.S.: Consumer Credit Change: USD 16.05B, positive as compared to the forecasts (USD 12.75B) as well as the previous 14.08B USD.

U.S.: Import Price Index (y/o/y): Remained same as the previous release of -1.5%.

U.S.: Trade Balance: USD -48.73B, quite negative as compared to the forecasts (USD -41.30B) as well as the previous -42.06B USD.

U.S.: Monthly Budget Statement: USD-0.30B, quite positive as compared to the forecasts (USD -22.50B) as well as the previous -172.11B USD.

Graphical representation of the relative strength of economic releases

(click to enlarge)relative strength

(Economic Strength meter, copyright ForexAbode.com)

Overall the Forex markets have seen some unexpected and very volatile moves since the end of December 2012 and the price action of EUR/USD has not been an exception to that.

What to expect during the next week:

EUR/USD moved over 1.3308 on January 4, 2013. This break represented a decisive break of the key resistances of 1.3283. The high of Friday was just below the second key resistance of 1.3385. On the upside a break over 1.3385 should take the pair towards 1.3486. It is interesting to note that the 1.3486 level which had proved to be a strong resistance during February 2011 had a prior infamous history. Eleven weeks before that, i.e. during early December 2010, EUR/USD had found resistance exactly at the same level. The 1.3486 level is also critical because of the psychological resistance of 1.3500 level. For past one year (and more), the price action has been below 1.3500.

The 1.3486 level does not only represent the resistance during the latter half of February 2012, but any move to it will also represent the 50% retracement of the downward move seen in the beginning of May, 2011 and July 24, 2012.

In case the pair manages a break over 1.3486 and then the psychological level of 1.3500, then it would also complete an inverted head and shoulder chart pattern and such a move should target 1.4000 next.

The above outlook will hold good as long as there is no break below 1.3228, which was the high of December 31st's Doji style candle. On the downside, such move should target a retest of 1.3016.

Disclaimer: These views are the views of the author and should not be taken as an investment advice. The author has put in all possible efforts to validate the correctness of the data provided but Seeking Alpha cannot take any responsibilities of any mistakes.

Source: EUR/USD Expected To Move Towards 1.3480