European Currency Trading Analysis and Trading Tips

The price test at 1.1255 occurred when the MACD indicator had just started moving downward from the zero line, confirming a suitable entry point for selling the euro. As a result, the pair declined toward 1.1228.

The euro declined following the release of European economic data, which put the central bank in a difficult position. Prices continue to accelerate, as the annual Producer Price Index (PPI) rose to 11.1% in September, while consumer inflation reached 4.0% in October, up from 3.8% in September. At the same time, economic activity is slowing. The Composite PMI fell to 51.7 from 53.1, German industrial orders increased by 4.4% against expectations of 4.8%, and French industrial production contracted by 0.5%. This divergence in economic trends typically puts pressure on the currency. High inflation leaves the European Central Bank (ECB) with little room to support economic growth, while a weakening economy limits its ability to tighten monetary policy.

In the second half of the day, the euro's performance will depend on US economic data and comments from Federal Reserve officials. The weekly initial jobless claims report is due, with claims expected to reach 197,000, compared with 194,000 previously. Continuing claims are forecast at 1.71 million, up from 1.70 million a week earlier. These figures have remained relatively low for several weeks, supporting the labor market. However, particular attention will be paid to speeches by Beth Hammack and Thomas Barkin. The market will look for confirmation that the Federal Reserve remains prepared to raise interest rates further, as the dollar is currently supported primarily by expectations of a rate hike in December.

Regarding the intraday strategy, the focus will primarily be on implementing Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Buying the euro today is possible if the price reaches the level around 1.1242 (the thin green line on the chart), with a target of 1.1263. At 1.1263, the position can be closed, and a short position can be opened in the opposite direction, targeting a reverse move of 30–35 points from the entry level. Further gains in the euro today are possible if US economic data comes in weaker than expected. Important! Before buying, make sure that the MACD indicator is above the zero line and has just started rising from it.

Scenario No. 2: Buying the euro today is also possible if the price tests 1.1228 twice consecutively while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and trigger an upward market reversal. A rise toward the opposite levels of 1.1242 and 1.1263 can be expected.

Sell Signal

Scenario No. 1: Selling the euro is planned after the price reaches 1.1228 (the thin red line on the chart). The target will be 1.1213, where the short position can be closed and a long position opened immediately in the opposite direction, targeting a reverse move of 20–25 points from this level. Selling pressure on the pair could return if US economic data comes in stronger than expected. Important! Before selling, make sure that the MACD indicator is below the zero line and has just started declining from it.

Scenario No. 2: Selling the euro today is also possible if the price tests 1.1242 twice consecutively while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and trigger a downward market reversal. A decline toward the opposite levels of 1.1228 and 1.1213 can be expected.

What the Chart Shows:

• Thin green line – the entry price at which the trading instrument can be bought.
• Thick green line – the estimated price at which Take Profit orders can be placed or profits can be closed manually, as further gains above this level are unlikely.
• Thin red line – the entry price at which the trading instrument can be sold.
• Thick red line – the estimated price at which Take Profit orders can be placed or profits can be closed manually, as further declines below this level are unlikely.
• MACD indicator. When entering the market, it is important to consider the overbought and oversold zones.

Important. Beginner Forex traders should exercise extreme caution when making market entry decisions. It is preferable to stay out of the market ahead of major fundamental data releases to avoid exposure to sharp exchange rate fluctuations. If trading during news releases, always place stop-loss orders to minimize potential losses. Without stop-loss orders, the entire trading account balance can be lost very quickly, especially when money management principles are not applied and large position sizes are used.

Remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for intraday traders.