The test of the 1.0488 level coincided with the moment when the MACD indicator was beginning to move downward from the zero mark. This confirmed the validity of the entry point for selling the euro, resulting in a 15-pip drop.
Next year, the potential for a spike in inflation adds additional pressure on the Federal Reserve. Despite cutting interest rates yesterday, officials also revised their forecasts, carefully analyzing the current economic situation. In the face of uncertainty arising from political changes, Fed officials sought to prevent a possible inflationary shock that could result from the actions of the new U.S. president. A critical factor is the possibility that the policies implemented by the new administration could significantly alter the financial landscape. Yesterday's measures to stimulate the economy may lead to increased consumer demand and, consequently, higher inflation. Furthermore, Trump's protectionist policies are likely to exacerbate the problem.
Today's figures on the current account balance from the European Central Bank and Germany's GfK Consumer Climate Index are unlikely to impact the foreign exchange market significantly. Investors have long factored into their forecasts the instability in the eurozone economy and the likelihood of further ECB rate cuts, which continue to exert pressure on the euro. The influence of this data is expected to be insufficient to reverse the trend. The best approach remains to look for selling opportunities during corrections, which aligns with continuing the new downward trend.
I will primarily rely on implementing Scenarios #1 and #2 for intraday trading.
Scenario #1: Today, I plan to buy the euro upon reaching the 1.0400 level (green line on the chart) with a target of rising to the 1.0425 level. At 1.0425, I plan to exit the market and simultaneously open a short position, aiming for a 30-35 pip movement in the opposite direction from the entry point. Anticipating euro growth during the first half of the day is only possible if strong data from the eurozone is released.
Important! Before buying, ensure that the MACD indicator is above the zero mark and just starting to move upward.
Scenario #2: I also plan to buy the euro today in case of two consecutive tests of the 1.0375 level, while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a market reversal upward. The expected targets for growth are 1.0400 and 1.0425.
Sell SignalScenario #1: I plan to sell the euro after it reaches the 1.0375 level (red line on the chart). The target will be the 1.0333 level, where I plan to exit the market and simultaneously open a long position, aiming for a 20-25 pip movement in the opposite direction from this level. Pressure on the pair can return at any moment.
Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting to move downward.
Scenario #2: I also plan to sell the euro today in case of two consecutive tests of the 1.0400 level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downward. The expected targets for the decline are 1.0375 and 1.0333.