Trade Analysis and Trading Advice for the Euro

The test of 1.1603 occurred when the MACD indicator had already moved significantly below the zero line, which limited the pair's downward potential. For this reason, I did not sell the euro.

The euro is approaching the release of US inflation data amid heightened expectations, and I consider this report the key event of the day. The headline figure is likely to accelerate under pressure from higher fuel prices and expensive oil, pushing annual inflation closer to 3.5–3.6%, while core inflation should be much more moderate, remaining around 2.5%. In my view, this divergence will be the main focus, as hawks will point to the headline figure and underlying demand, while doves will emphasize stable core inflation and the absence of secondary effects.

For the single currency, the situation is straightforward: stronger inflation will restore demand for the dollar and put pressure on EUR/USD, while softer figures will give the euro a chance to continue rising. I would also note that the University of Michigan's consumer sentiment and inflation expectations data will be released today, and the Fed is paying particularly close attention to the latter. The market is pricing in about a 70% probability of a rate hike, and I tend to believe that this estimate will change very little after the report. I expect the euro to remain driven by these expectations until the Fed meeting itself, with today's report likely to cause only a spike in volatility.

As for the intraday strategy, I will focus primarily on scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, the euro can be bought when the price reaches around 1.1603 (the green line on the chart), with a target of rising toward 1.1627. At 1.1627, I plan to exit the market and also sell the euro in the opposite direction, targeting a move of 30–35 points from the entry point. The euro can be expected to rise today only if the US data are weak. Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the euro today if the price tests 1.1591 twice consecutively while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to an upward reversal. A rise toward the opposite levels of 1.1603 and 1.1627 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the euro after the price reaches 1.1591 (the red line on the chart). The target will be 1.1572, where I plan to exit the market and immediately buy in the opposite direction, targeting a move of 20–25 points in the opposite direction from the level. The pair will come under renewed pressure if the economic data are strong. Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: I also plan to sell the euro today if the price tests 1.1603 twice consecutively while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a downward reversal. A decline toward the opposite levels of 1.1591 and 1.1572 can be expected.

What the Chart Shows:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the projected price at which Take Profit orders can be placed or profits can be closed manually, as further growth above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the projected price at which Take Profit orders can be placed or profits can be closed manually, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to take the overbought and oversold zones into account.

Important. Beginner Forex traders should be very cautious when making market-entry decisions. Before the release of important fundamental reports, it is best to stay out of the market to avoid being caught in sharp price fluctuations. If you decide to trade during a news release, always use stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Making trading decisions spontaneously based on the current market situation is an inherently losing strategy for an intraday trader.