Trading recommendations

The euro/dollar pair tested 1.0180, when the MACD indicator was well above the zero level, which capped the pair's upward potential, especially after a jump at the beginning of the European session. Traders had nothing to do but search for signals described in scenario 2. The second test of 1.1080 took place when the MACD indicator was in the overbought area and had already started falling. I think that it was a perfect sell signal. As a result, the pair dropped by more than 60 pips. There were no other signals.

Comments provided by European Central Bank (ECB) Vice President Luis de Guindos, Deutsche Bundesbank President Joachim Nagel, and Isabel Schnabel, executive board member of the European Central Bank, boosted the euro. However, the rally stopped at the beginning of the US trade. Today, traders should pay attention to some fundamental data from Germany: the CPI, the ZEW business sentiment index, and the ZEW current conditions indicator. A decline in these indicators may have a negative influence on the euro. It will inevitably affect business sentiment in the whole eurozone. In the second part of the day, the US is going to disclose very important data, namely CPI and core CPI, which excludes prices of food and energy. If the US inflation slackens more than expected, demand for risk assets, including the euro, will mount. In this case, the euro/dollar pair may reach new monthly highs.

Signals to buy the euro

Scenario 1: today, traders can buy the euro after it hits 1.0160 (a green line) with the target at 1.0213. It will be better to leave the market at 1.0213 and open an opposite order, expecting a movement of 30-35 pips. If the US inflation drops, the euro may show a significant rise. The fact is that in this case, the US Fed will have to switch to a more dovish approach. Before opening buy orders, make sure that the MACD indicator is above zero and is starting to climb from this level.

Scenario 2: traders can also buy the euro from 1.0125. At that moment, the MACD indicator should be in the oversold area, which may cap the pair's upward potential, thus causing the price reversal. In the event of this, the price may increase to 1.0160 and 1.0213.

Signals to sell the euro

Scenario 1: traders may go short after the price hits 1.0125 (a red line) with the target at 1.0074, where it is recommended to leave the market. At this level, traders may open long positions, expecting a rise of 20-25 pips. Pressure on the pair will return only in case of a jump in inflation. Notably, before opening sell orders, make sure that the MACD indicator is below zero and is starting to drop from it.

Scenario 2: traders can also sell the euro if the price reaches 1.0160. At that moment, the MACD indicator should be in the overbought area, which will cap the upward potential of the pair and cause the market reversal. The pair may slide to 1.0125 and 1.0074.

What we see on the trading chart:

A thin green line is a key level at which you can place long positions on EUR/USD.

A thick green line is the target price since the quote is unlikely to move above it.

A thin red line is a level at which you can place short positions on EUR/USD.

A thick red line is the target price since the quote is unlikely to move below it.

A MACD line: when entering the market, it is important to be guided by the overbought and oversold zones.

Important: Novice traders need to be very careful when making decisions to enter the market. Before the release of important reports, it is better to stay out of the market to avoid sharp fluctuations in the price. If you decide to trade during the news release, place stop orders to minimize losses. Without stop orders, you can lose the entire deposit, especially if you do not use money management and trade large volumes.

Notably, for successful trading, it is necessary to have a clear trading plan. Rash trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.