Trade review and tips for trading the European currency

The price test of 1.1618 occurred as the MACD indicator began moving up from the zero line, confirming the right entry point to buy the euro. As a result, the pair reached the target level of 1.1633.

A fresh batch of US data came in moderately weak, and the dollar lost ground. The NFIB small-business optimism index fell to 98.7, with business-conditions expectations and hiring plans dropping the most, while credit data showed Americans cautious about card debt. To me, this fits the broader picture of cooling demand, also reflected in recent retail declines, and in theory all this supports a Federal Reserve pause.

Today's morning eurozone calendar is light: essentially only French industrial production and two speeches — Lagarde and Nagel. Normally comments from the European Central Bank chief and the Bundesbank president can move the euro, but there is an important caveat now. On the eve of the meeting, the central bank observes a quiet period, so speakers will likely avoid discussing rates, and I would not expect fresh signals. That predictability, in my view, leaves room for the euro to maneuver. Without reasons to frighten buyers and with the market nearly unanimous on a hike to 2.5%, the single currency retains upside potential versus the dollar. I lean toward the view that EUR/USD will keep an upward bias until tomorrow's decision, and the real determinant will be not the hike itself but whether the ECB hints at the next step.

For intraday strategy, I will rely mainly on Scenarios No. 1 and No. 2.

Buy scenarios

Scenario No. 1: Today, the euro can be bought if the price reaches around 1.1651 (the green line on the chart), with a target to rise to 1.1674. At 1.1674, I plan to exit the market and also sell the euro in the opposite direction, expecting a 30–35 pip move from the entry. Expect euro strength as part of the continuing bull market. Important! Before buying, make sure 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 it tests 1.1633 twice in a row while the MACD indicator is in an oversold area. This will limit the pair's downside potential and lead to an upward reversal. One can expect a rise toward the opposite levels of 1.1651 and 1.1674.

Sell scenarios

Scenario No. 1: I plan to sell the euro after the level 1.1633 (the red line on the chart) is reached. The target will be 1.1613, where I plan to exit the market and buy immediately in the opposite direction (expecting a 20–25 pip move in the opposite direction from that level). Pressure on the pair will return today with weak data. Important! Before selling, make sure 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 in the event of two consecutive tests of 1.1651 when the MACD indicator is in an overbought area. This will limit the pair's upside potential and lead to a downward reversal. One can expect a decline toward the opposite levels of 1.1633 and 1.1613.

What to Look for on the Chart:

• Thin Green Line – Entry price at which you can buy the trading instrument;
• Thick Green Line – Estimated price where you can set Take Profit or manually secure profits, as further growth above this level is unlikely;
• Thin Red Line – Entry price at which you can sell the trading instrument;
• Thick Red Line – Estimated price where you can set Take Profit or manually secure profits, as further decline below this level is unlikely;
• MACD Indicator. When entering the market, it's important to consider overbought and oversold zones.

Important: Beginner traders in the Forex market need to be very cautious when making entry decisions. It is best to stay out of the market ahead of significant fundamental reports to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you do not employ money management practices and trade large volumes.

Also, remember that successful trading requires a clear trading plan, similar to the one provided above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for intraday traders.