Analysis of Trades and Trading Tips for the Euro
The price test at 1.1105 occurred when the MACD indicator had already moved significantly above the zero line. However, after the release of key U.S. data, this did not prevent a buy entry for the euro in anticipation of a new wave of growth. As a result, the pair rose toward the target level of 1.1198.
The U.S. Consumer Price Index declined in March rather than increased as economists had expected. This opens the door for the Federal Reserve to cut interest rates more aggressively to support an economy whose growth is under threat. The unexpected drop in inflation could act as a catalyst for a shift in current monetary policy as early as the upcoming May meeting. Previously, the Fed had repeatedly expressed its readiness to continue cutting rates, but the inflation data hadn't supported such action. Now, things look different. Moreover, a weakening dollar could benefit U.S. exports by making them more competitive globally. However, this could also lead to higher import costs, potentially offsetting the positive effect.
The euro's rally may continue today. A report showing a rise in Germany's Consumer Price Index would be enough to sustain this trend. The Eurogroup meeting will also be in the spotlight. Despite gradually declining inflation in the eurozone, U.S.-initiated trade wars are pressuring the ECB to take a cautious approach to rate cuts. Inflation data from Germany, the eurozone's largest economy, may reinforce policy tightening expectations.
The Eurogroup meeting, where eurozone finance ministers will discuss the economic outlook and policy coordination, could also influence euro dynamics. Participants' comments about economic prospects and budget strategies could provide investors with clues about the future path of the European currency.
For intraday strategy, I will focus primarily on Scenarios #1 and #2.
Buy Signal
Scenario #1: I plan to buy the euro today at the entry point near 1.1296 (green line on the chart), targeting a rise toward 1.1389. At 1.1389, I plan to exit the market and sell the euro in the opposite direction, aiming for a 30–35 pip pullback from the entry. Euro growth in the first half of the day is only likely after strong data.
Important: Before buying, ensure the MACD indicator is above the zero line and beginning to rise.
Scenario #2: I also plan to buy the euro today in the event of two consecutive tests of 1.1230, with the MACD in the oversold zone. This will limit the pair's downside potential and trigger an upward reversal. Targets would be 1.1296 and 1.1389.
Sell Signal
Scenario #1: I plan to sell the euro after it reaches 1.1230 (red line on the chart). The target will be 1.1162, where I plan to exit short positions and buy in the opposite direction, aiming for a 20–25 pip rebound. Downward pressure on the pair is unlikely to return today.
Important: Before selling, ensure the MACD indicator is below the zero line and beginning to decline.
Scenario #2: I also plan to sell the euro if there are two consecutive tests of 1.1296, with the MACD in the overbought zone. This will cap the pair's upside and trigger a downward reversal. A decline toward 1.1230 and 1.1162 is expected.
What's on the Chart:
- The thin green line represents the entry price where the trading instrument can be bought.
- The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
- The thin red line represents the entry price where the trading instrument can be sold.
- The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
- The MACD indicator should be used to assess overbought and oversold zones when entering the market.
Important Notes:
- Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
- Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.
