Trade Analysis and Tips for Trading the Euro

The test of the 1.1590 level occurred when the MACD indicator had already moved significantly above the zero line, which limited the pair's upward potential. For this reason, I did not buy the euro.

Today's economic data from Germany and Italy strongly encouraged traders, leading to increased demand for the euro. The main surprise came from the ZEW indices. In Germany, the index rose instead of declining as expected. Expectations in the eurozone also exceeded economists' forecasts. Although this sudden surge in optimism is encouraging, it contrasts with the weak performance of the manufacturing sectors in both countries. Germany's Services PMI, for example, barely remained above the 50-point threshold, while Italy's Manufacturing PMI continued to decline, signaling a slowdown in activity. This divergence between future expectations and current conditions highlights the uncertainty that continues to dominate the European economic environment.

In the second half of the day, important U.S. data will be released that could significantly affect trader sentiment. Particular attention will be paid to U.S. building permits and housing starts. These indicators are among the key gauges of activity in the construction sector, which is closely tied to the overall health of the economy. A decline in permits and housing starts may signal a slowdown in residential construction, posing risks to related industries. Conversely, positive figures would be viewed as a sign of continued economic growth and strengthening economic conditions, which could support the U.S. dollar against the euro.

As for the intraday strategy, I will primarily rely on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, buying the euro can be considered when the price reaches the 1.1621 level (green line on the chart), with a target at 1.1663. At 1.1663, I plan to exit long positions and open short positions in the opposite direction, targeting a 30–35 point correction from the entry point. Further euro gains can be expected only if U.S. data comes in weak.

Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to move higher from it.

Scenario No. 2: I also plan to buy the euro today if the price tests the 1.1597 level twice consecutively while the MACD indicator is in oversold territory. This would limit the pair's downward potential and trigger a reversal to the upside. In this case, growth toward the opposite levels of 1.1621 and 1.1663 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the euro after the price reaches 1.1597 (red line on the chart). The target will be 1.1560, where I intend to exit short positions and immediately open long positions in the opposite direction, targeting a 20–25 point rebound.

Pressure on the pair is likely to return if U.S. data comes in strong.

Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to move lower from it.

Scenario No. 2: I also plan to sell the euro today if the price tests the 1.1621 level twice consecutively while the MACD indicator is in overbought territory. This would limit the pair's upward potential and trigger a downward reversal. In this case, a decline toward the opposite levels of 1.1597 and 1.1560 can be expected.

Chart Notes:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the estimated Take Profit level or an area where profits can be manually locked in, 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 estimated Take Profit level or an area where profits can be manually locked in, as further decline below this level is unlikely;
• MACD Indicator – when entering the market, it is important to use overbought and oversold zones as guidance.

Important: Beginner Forex traders should exercise extreme caution when making market entry decisions. It is best to stay out of the market ahead of major fundamental reports to avoid sharp price fluctuations. If you choose to trade during news releases, always place stop-loss orders to minimize potential losses. Without stop-loss orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

Remember that successful trading requires a clear trading plan, such as the one outlined above. Making spontaneous trading decisions based solely on current market conditions is inherently a losing strategy for an intraday trader.