EUR/USD overview and trading tips
The price tested the level of 1.0013 at the moment when the MACD indicator was moving down from the zero level. This confirmed the entry point for selling the euro, considering that the pair might leave the sideways channel. As a result, the price dropped by 30 pips. Long positions opened on a rebound from 0.9976 did not bring any profit.
The PPI data from Germany clearly indicated high inflationary pressure in the country which the ECB is actively fighting. Yet, this did not cause any changes in the market. The same can be said about the data on the ECB's current account balance. Likewise, markets downplayed the speech by ECB President Christine Lagarde. The pair moved lower following the release of the mixed data regarding the US housing market.
There are no important events on Wednesday in the first half of the day that could possibly support the euro. The main focus will be on the Fed's announcement released in the second half of the day. Before that, the US will publish the report on existing home sales which is of minor importance to the market. On the other hand, the FOMC decision on interest rates is worth paying attention to. The accompanying statement and the economic outlook presented by the Fed will shape investor sentiment and will most likely boost the demand for the US dollar. Jerome Powell's speech will be the decisive factor.
Buy signal
Scenario №1: buying the euro will be possible when the price hits the level of 0.9923 (a green line on the chart), with the upward target found at 0.9964. At this point, I would recommend leaving the market and selling the euro, bearing in mind an opposite movement of 30-35 pips from the entry point. The pair is unlikely to perform a strong rise in the near term, especially ahead of the Fed's meeting. Please note! Before buying the pair, make sure that the MACD indicator is holding above zero and is just about to move up.
Scenario №2: it is also advisable to buy the euro if the price reaches the mark of 0.9888. However, at this moment, the MACD indicator should be in the oversold zone. This will limit the downside potential of the pair and will initiate an upside reversal. In this case, the pair may rise to 0.9923 and 0.9964.
Sell signal
Scenario №1: traders can sell the euro upon reaching the level of 0.9888 (a red line on the chart). The level of 0.9852 will serve as a downward target. At this point, I would recommend leaving the market and buying the euro, bearing in mind an opposite movement of 20-25 pips from the entry point. The hawkish stance of the Fed will put more pressure on the pair. Please note! Before selling the pair, make sure that the MACD indicator is located below zero and is just about to move lower from there.
Scenario №2: it is also possible to sell the euro when the price hits the level of 0.9923. However, the MACD indicator should be in the overbought zone at this moment, thus limiting the upside potential of the price and leading to a downside reversal. In this case, the pair may decline to 0.9888 and 0.9852.
What's on the chart:
The thin green line indicates an entry point recommended for buying the instrument.
The thick green line suggests a point for setting a take-profit order or for taking profit manually. The price is unlikely to move above this line.
The thin red line indicates an entry point recommended for selling the instrument.
The thick red line suggests a point for setting a take-profit order or for taking profit manually. The price is unlikely to fall below this line.
The MACD indicator and its overbought or oversold status should be considered before entering the market.
Important: beginners on Forex should be very careful when entering the market. It is recommended to stay out of the market ahead of important publications to avoid sharp price fluctuations. If you decide to trade at the time of news releases, make sure you set stop-loss orders to minimize losses. Otherwise, you risk losing your entire deposit very quickly, especially if you trade with big volumes and do not use money management.
For successful trading, you need to have a well-developed trading plan similar to that presented above. Spontaneous decision-making based on the current market situation is a losing strategy for a day trader.