FX.co ★ Analysis and trading tips for EUR/USD on August 31

Analysis of transactions in the EUR / USD pair

Euro tested 1.0008 at the time when the MACD was just starting to move above zero, which was a good signal to buy. It led to a price increase of more than 40 pips, which was followed by the update of the weekly high. This indicates continued demand for euro and a likely continuation of an upward correction. No other signals appeared for the rest of the day.

Euro fell on Tuesday as the consumer confidence report in the Euro area and consumer price index in Germany disappointed traders. It also declined because the consumer confidence data in the US exceeded expectations, which raised demand for dollar. But risk appetite returned before the day ended, offsetting the previous movements.

Today, a number of reports are scheduled to be released, namely France's GDP, changes in the number of unemployed in Germany and consumer price index in the eurozone. The figures will most likely point to a gradual slide of the economy into recession, which will temporarily limit the upward potential of euro. In the afternoon, the US will publish data on employment in the non-farm sector, followed by the index of business activity in Chicago. Good numbers will lead to a rise in dollar and sharp downward movement in EUR/USD. The speech by FOMC member Loretta Mester is unlikely to affect the market.

For long positions:

Buy euro when the quote reaches 1.0043 (green line on the chart) and take profit at the price of 1.0100. Although there is little chance for a rally, an upward correction could occur.

Take note that when buying, the MACD line should be above zero or is starting to rise from it. Euro can also be bought at 0.9998, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0043 and 1.0100.

For short positions:

Sell euro when the quote reaches 0.9998 (red line on the chart) and take profit at the price of 0.9929. Pressure will return if sellers manage to bring the pair back below parity.

Take note that when selling, the MACD line should be below zero or is starting to move down from it. Euro can also be sold at 1.0043, but the MACD line should be in the overbought area, as only by that will the market reverse to 0.9998 and 0.9929.

What's on the chart:

The thin green line is the key level at which you can place long positions in the EUR/USD pair.

The thick green line is the target price, since the quote is unlikely to move above this level.

The thin red line is the level at which you can place short positions in the EUR/USD pair.

The thick red line is the target price, since the quote is unlikely to move below this level.

MACD line - when entering the market, it is important to be guided by the overbought and oversold zones.

Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decision based on the current market situation is an inherently losing strategy for an intraday trader.