Trade review and tips for trading the European currency

The price test of 1.1639 occurred as the MACD indicator began moving down from the zero line, confirming the right entry point to sell the euro. As a result, the pair fell about 15 pips.

Despite the small decline, the dollar spent the day in a narrow range versus the euro, and two factors explain this. First, no important US data were released to give the American currency reason to move. Second, ahead of the key event in the eurozone, traders were taking profits and preferring caution to active bets. As a result, EUR/USD essentially froze, and I consider such behavior ahead of the European Central Bank meeting quite natural.

This morning, Germany's CPI and French industrial production are scheduled, but the main event will undoubtedly be the ECB rate decision. The market expects a 25 bp hike to 2.5%, and that step should support the single currency because tightening increases its appeal. However, I believe the press conference and Christine Lagarde's commentary will matter more than the verdict itself. Lagarde's tone will likely determine the pair's reaction: a hawkish tilt and hints of further moves would trigger another wave of euro strength; a dovish tone could produce a surprisingly weak response because the hike is already mostly priced in and the market trades expectations about the next step rather than the executed fact. Therefore, until the press conference, I expect restrained EUR/USD dynamics; the real movement will start after Lagarde outlines the central bank's intentions.

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 1.1645 (the green line on the chart), with a target to rise to 1.1667. At 1.1667, 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 1.1629 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 1.1645 and 1.1667.

Sell scenarios

Scenario No. 1: I plan to sell the euro after the level 1.1629 (the red line on the chart) is reached. The target will be 1.1603, 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 1.1645 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 1.1629 and 1.1603.

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.