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Analysis of transactions in the EUR / USD pair
EUR/USD reaching 1.0735 led to a sell signal in the market, however, having the MACD line far away from zero limited the downside potential of the pair. Its second test was more successful as the indicator finally moved below zero, prompting a 40-pip price decrease. The pair then went to 1.0694, where a buy signal was formed, which led to a 15-pip rise. No other signal appeared for the rest of the day.
GDP and CPI data from France, as well as the unemployment report from Germany, did not affect the market as the focus of traders was on the inflation report for the euro area. Consumer prices were shown to have jumped 8.1% in May, higher than the forecasted increase of only 7.7%. The surge was caused by rising food and energy prices. As for core inflation, it rose by 3.8%, also above the ECB's target of about 2.0%.
Today, a report on manufacturing activity in the eurozone will be published, and that will most likely increase pressure on EUR/USD. The unemployment rate is unlikely to be of great interest, while the speech of ECB members Christine Lagarde, Fabio Panetta and Philippe Lane will drive the market. In the afternoon, the US will release reports on employment in the manufacturing sector, as well as changes in the number of people employed in the non-farm sector. An increase will raise demand for dollar, leading to a decline in the pair. The speech of Fed member James Bullard may also attract the attention of traders, but it is unlikely that it will provoke large changes.
For long positions:
Buy euro when the quote reaches 1.0722 (green line on the chart) and take profit at the price of 1.0751 (thicker green line on the chart). There is a chance for a rally today, but only amid strong data on the eurozone and hawkish statements by ECB President Christine Lagarde. Nevertheless, make sure that when buying, the MACD line is above zero or is starting to rise from it. It is also possible to buy at 1.0705, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0722 and 1.0751.
For short positions:
Sell euro when the quote reaches 1.0705 (red line on the chart) and take profit at the price of 1.0672. Pressure will return if statistics in the EU come out weaker than expected. However, note that when selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro can also be sold at 1.0722, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.0705 and 1.0672.
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.
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