Dennis Carr is a forex trader and writer. He has written and presented six full-length forex training films and has produced numerous other forex-related materials. He is currently writing two blogs, Forex Focus YouTube channel and Colt on Candles.

Recessionary gloom gathers. The week was marked by mounting concerns for the integrity of the euro and saw another round of US government action to shore up its buckling banking sector.

Euro sentiment took a dive on Monday with the announcement that Spain had joined Greece and Ireland on Standard & Poor's negative credit-watch list. The global recession has hit the euro-zone's fourth largest economy particularly badly and any down-grading will spell trouble for the European currency. EUR/USD traded lower throughout Monday and Tuesday to test support at 1.3150. The pair climbed to test 1.3335 early Wednesday only to plunge more than 200 pips over the next few hours as the news broke that the S&P was, in fact, cutting Greece's credit rating from A to A-. Wednesday's US retail sales numbers for December made grim reading indeed. As stocks on Wall Street tumbled, the dollar strengthened as traders ran for cover. On Thursday the ECB cut interest rates by the consensus 50bps to 2.00%. ECB president Jean-Claude Trichet prepared the ground for further cuts and suggested that these could well happen in March. The euro fell against the dollar after the ECB press conference to make the week's low of 1.3025. The euro recovered from this low as the news broke that the US Treasury and The Fed were throwing a $138B lifeline to troubled giant, Bank of America. This news brought some relief to EUR, which closed the week at 1.3288.

Sterling also kicked off the week heading south against the greenback. The data out of the UK has been pretty dire of late and Tuesday's retail sales numbers were no exception, surveying the steepest decline since records began 14 years ago. Cable fell below 1.45 late Tuesday evening and then went on to range between 1.45 and 1.47 until the US government's latest banking bail-out saw an upside breakout falter a tad above 1.49. The pound then took a dive as British banking giant Barclays saw its value shrink by 25% amid worries about the bank's capital and outlook. Barclays were quick to deny that there were grounds for these concerns and the GBP closed a smidgeon below 1.4750. The British PM, the Chancellor of the Exchequer (UK finance minister) and the bank of England have spent this weekend putting together another emergency package to shore up the banking system and get credit moving through the economy. We will see what they have come up with early this week, no doubt.

Everything will be on hold in the US on Monday and Tuesday. There is talk that there will be a Obama rally on Wall Street and this would translate as pound and euro strength on the Forex market. Thursday is the most significant in terms of US data with housing numbers and the weekly new unemployment claims.

Things are busier in euro-land. Tuesday has the highly-regarded German ZEW data. Thursday sees the release of the ECB's monthly bulletin, the stats the bank perused while making last week's interest rate cut. We've also got the zone's industrial new orders to look forward to on Thursday and on Friday there's the regular raft of PMI data.

It is a pretty hefty week for the UK. There's consumer prices on Tuesday and jobs data on Wednesday. Friday includes preliminary GDP and Retail Sales in the line-up.

We're currently pretty bearish on the euro, although Obama euphoria may lift it to test 1.3450. However, if the news breaks that Spain's credit rating has been down-graded or further cracks appear on the euro-façade, a clear break-down of 1.30 could see support being tested at 1.2330.

Cable is still ranging within 1.5350 and 1.4370. However, look for downside action.

USD/JPY will find support at 88.50 and resistance at 94.50

You can view this report as a video on the Forex Focus YouTube channel

For a weekly candle analysis see my blog, Colt on Candles