Trade Analysis and Tips for the Euro Currency

The price test at 1.1639 coincided with the MACD indicator just beginning to move down from the zero mark, confirming the correct entry point to sell the euro. As a result, the pair declined towards the target level of 1.1593.

Kevin Warsh's tough speech in Jackson Hole provided support for the dollar against all currencies. The Federal Reserve chair indicated that the central bank's prevailing focus should now be on prices, reinforcing this point with specific figures. Inflation measured by the PCE for six months accelerated to 4.1% compared to 3.7% year-on-year, and the summer improvement, according to him, does not indicate a significant recovery of underlying trends. Particularly hawkish was his thesis about the economy's state, which, according to Warsh, is not being restrained by Fed policy. He openly stated that it is difficult to describe broad financial conditions as restrictive, citing a 9% increase in capital expenditures, over 20% profit growth for the S&P 500, and credit spreads at historical lows. With full employment and an unemployment rate of 4.1%, this effectively became an argument for further tightening.

Against this backdrop, the euro gave ground. The strengthening of expectations for a tough Fed policy increased the dollar's attractiveness and pushed the EUR/USD pair lower.

Today, the euro enters the first half of the day with a focus on the release of inflation data from Germany, including the consumer price index and its harmonized version according to EU standards. Inflation is considered one of the key benchmarks for the euro, as it influences the trajectory of the European Central Bank's rate, and the harmonized index is particularly important because it is calculated using a unified European methodology. The market reacts primarily to deviations of the actual figures from the forecasts. This opens the door for the euro to recover, but only with a big surprise. If the numbers come in significantly above economists' expectations, the EUR/USD pair will have a basis for a short-term bounce, as high inflation will support expectations of tighter ECB policy.

Regarding the intraday strategy, I will focus on implementing scenarios #1 and #2.

Buy Scenarios

Scenario #1: Today I will buy euros when the price reaches around 1.1595 (the green line on the chart), with a target for growth to 1.1615. At 1.1615, I plan to exit the market and sell euros back in anticipation of a move of 30-35 pips from the entry point. The euro's growth can only be expected after very strong data. Important! Before buying, ensure that the MACD indicator is above the zero mark and just starting to rise from it.

Scenario #2: I also plan to buy euros today in the event of two consecutive tests of 1.1585 when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. Growth can be expected towards opposing levels of 1.1595 and 1.1615.

Sell Scenarios

Scenario #1: I plan to sell euros once the price reaches 1.1585 (the red line on the chart). The target will be 1.1562, where I intend to exit the market and buy back immediately (anticipating a move of 20-25 pips in the opposite direction from that level). Pressure on the pair today will return with weak data. Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting to decline from it.

Scenario #2: I also plan to sell euros today in case of two consecutive tests of 1.1595 when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. A decline can be expected towards the opposing levels of 1.1585 and 1.1562.

What the Chart Shows:

• Thin green line – entry price for buying the trading instrument;
• Thick green line – estimated price where take profit can be set, or profit can be realized, as further growth above this level is unlikely;
• Thin red line – entry price for selling the trading instrument;
• Thick red line – estimated price where take profit can be set, or profit can be realized, as further decline below this level is unlikely;
• MACD Indicator. When entering the market, it is important to be guided by overbought and oversold zones.

Important: Beginner forex traders need to make entry decisions very cautiously. Before key fundamental reports are released, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without placing stop orders, you can quickly lose your entire deposit, especially if you do not practice money management and trade large volumes.

And remember, successful trading requires a clear trading plan, as outlined above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.