Trade Analysis and Recommendations for the Euro

A test of the 1.0648 level coincided with the MACD indicator rising significantly above the zero mark, which limited the pair's upward potential. For this reason, I refrained from buying the euro.

Despite lackluster services sector data from the eurozone, the euro continued its upward movement, reinforcing the bullish trend. The possibility of financial policy easing in Germany is encouraging investors to bet on improved economic conditions and euro appreciation in the longer term. Meanwhile, discussions about potential Fed rate cuts, which were subtly hinted at by U.S. Treasury Secretary Bessent, are weighing on the dollar.

However, risks remain. Eurozone inflation remains stubbornly high, which may force the ECB to adopt a cautious approach to rate cuts, dampening investor enthusiasm. Additionally, geopolitical tensions, particularly in Eastern Europe, continue to act as a restraining factor for the euro.

In the second half of the day, ADP employment data for February will be released, along with the ISM Services PMI and the Composite PMI index. These figures will be crucial for assessing the state of the U.S. economy. Investors will closely analyze the ADP employment report, which serves as a leading indicator for the official nonfarm payrolls (NFP) data. Strong figures may strengthen the dollar and put pressure on the euro.

The ISM Services PMI will provide insights into service sector performance, which constitutes a significant portion of the U.S. economy. A higher index reading signals expansion, which is typically a positive economic indicator. The Composite PMI combines both manufacturing and services sector data, offering a broader picture of economic activity and serving as a key indicator for growth trends and forecasts.

For today's intraday trading strategy, I will primarily rely on Scenario #1 and Scenario #2.

Buy Signal

Scenario #1: Buying the euro is advisable if the price reaches 1.0733, targeting an upward move toward 1.0792. At this level, I plan to exit long positions and initiate short trades in the opposite direction, expecting a 30-35 point correction. A bullish continuation today is only likely if U.S. economic data disappoints. Important: Before entering long positions, confirm that the MACD indicator is above the zero mark and beginning its upward movement.

Scenario #2: Another buying opportunity will arise if the price tests 1.0685 twice, while the MACD indicator is in oversold territory. This would limit the pair's downward potential and trigger a bullish reversal. The anticipated targets for this scenario are 1.0733 and 1.0792.

Sell Signal

Scenario #1: Selling the euro is an option once the price reaches 1.0685, with a downward target of 1.0623, where I plan to exit short positions and buy the euro again for a 20-25 point retracement. Bearish pressure could return if U.S. data comes in stronger than expected. Important: Before selling, confirm that the MACD indicator is below the zero mark and beginning to decline.

Scenario #2: Another selling opportunity will emerge if the price tests 1.0733 twice, while the MACD indicator is in overbought territory. This would limit the pair's upward potential and trigger a bearish reversal, with a downward move expected toward 1.0685 and 1.0623.

What's on the chart:

• Thin green line – Entry price for long positions.
• Thick green line – Suggested Take Profit level or an area where profit-taking is advisable, as further growth beyond this level is unlikely.
• Thin red line – Entry price for short positions.
• Thick red line – Suggested Take Profit level or an area where profit-taking is advisable, as further decline beyond this level is unlikely.
• MACD Indicator – Essential for determining overbought and oversold zones before entering the market.

Important Trading Considerations

For beginner traders in the Forex market, making careful entry decisions is crucial. It is advisable to stay out of the market before major economic reports to avoid sharp price swings. If you choose to trade during high-impact news releases, always use stop-loss orders to minimize potential losses. Failing to set stop-losses can result in rapid account depletion, especially when trading large volumes without proper risk management.

Lastly, a well-defined trading plan is essential for successful trading, as demonstrated in the strategy outlined above. Making impulsive trading decisions based on real-time market fluctuations is a losing approach for intraday traders.