The rally in the EUR/USD stalled at our previous top-end resistance of 1.2868, and is proving indecisive in reaction to more negative data from Germany. The economic data released from Germany this week is jaw-dropping. Today Germany reported a 7.5% decline in Industrial Production, eclipsing analyst expectations of a 3.3% decline.

We can't forget Germany's terrible Factory Orders report in addition to PPI showing deflation. In other words, Germany's economic environment has taken a sudden turn for the worst, and the ECB is likely taking notice.

The question becomes whether the ECB lowers rates from 2.5% or implements quantitative easing. Either choice is very negative for the EUR/USD, giving us all the reason to be bearish on the currency pair trend-wise. Bottom line, the ECB will need to take action, and fast.

The EUR/USD still faces February highs and our 2nd tier downtrend line, not to mention the psychological 1.30 zone licks its chops in the distance.

Fundamentally, we find support of 1.2770 with additional supports resting at 1.2730, 1.2706, and 1.2680. To the topside, see resistance at 1.2797 with additional resistances hanging at 1.2828, 1.2868, and 1.2916. The EUR/USD is currently exchanging at 1.2787.

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