Analysis of transactions in the EUR / USD pair

A signal to buy emerged after EUR/USD hit 1.1433. However, there was no strong movement because the MACD line being far from zero limited the upside potential of the pair. Perhaps traders were awaiting today's inflation data so they did not act more aggressively. Surprisingly though, there was also no decrease in the afternoon even though the pair hit the same level again and the MACD line was in the overbought area. Also, no other signal appeared for the rest of the day.

Foreign trade balance in Germany and industrial production in Italy disappointed traders as both turned out much worse than expected. Meanwhile, US data on wholesale inventories did not affect the market, while the speeches of FOMC representatives Michelle Bowman and Loretta Mester only strengthened equities.

Today promises to be interesting EUR/USD will climb up if the upcoming statements from ECB representatives Frank Elderson, Luis de Guindos and Philip Lane turn out to be hawkish. Then, in the afternoon, a dip will occur as strong January data on US inflation will return demand on dollar. That is because persistently high inflation will force the Fed to take more aggressive actions on monetary policy. The weekly report on jobless claims will not be of much value to the market after the above figures.

For long positions:

Buy euro when the quote reaches 1.1434 (green line on the chart) and take profit at the price of 1.1481 (thicker green line on the chart). A rally will occur if reports from the Euro area exceed expectations. But more important will be the data on US inflation as that will set the direction of the market until the end of the week.

Before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.1412, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.1434 and 1.1481.

For short positions:

Sell euro when the quote reaches 1.1412 (red line on the chart) and take profit at the price of 1.1350. Be careful and cautious when selling at lows because the lower euro falls, the more demand will return to it.

Also, before selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro can also be sold at 1.1434, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.1412 and 1.1350.

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 decisions based on the current market situation is an inherently losing strategy for an intraday trader.