Trade review and tips for trading the European currency

The price test of 1.1632 occurred when the MACD indicator was well above the zero line, limiting the pair's upside potential. The second test of 1.1632 triggered Sell Scenario No. 2 for the euro, resulting in a 10-pip decline.

The absence of US data due to the Labor Day holiday naturally affected dollar volatility, and many pairs traded inside sideways channels. On days like this, when large US participants drop out, liquidity thins and the market loses its ability to produce strong directional moves, so I did not expect otherwise. The dollar received neither reasons to rally nor strong pressure, and most pairs spent the day rather listlessly. Nevertheless, euro buyers, encouraged by the strong eurozone GDP report, tried to push the pair above the weekly high. They failed to hold it, which I find telling — without support from the US session, it is difficult to carry an impulse to completion.

Today, in the first half of the day, attention on the single currency will focus on Germany's and France's trade-balance data. The trade balance reflects the difference between exports and imports; I usually treat it as a secondary indicator, but right now it has special weight. Recall that net exports drove recent eurozone GDP growth, so fresh external-trade data from the bloc's two largest economies can either confirm that support or call it into question.

In my view, strong trade data will give the euro a chance to continue rising versus the dollar, since robust exports will reinforce belief in economic resilience and support expectations of European Central Bank hawkishness ahead of its meeting. Weak data, however, could seriously dent buyers' bullish stance because it would hit the only working growth driver. That is why the euro's reaction will largely depend on how the numbers compare with expectations, and until their release, I expect restrained EUR/USD dynamics.

For intraday strategy, I will rely mainly on executing Scenarios No. 1 and No. 2.

Buy scenarios

Scenario No. 1: Today, the euro can be bought if the price reaches around 1.1636 (the green line on the chart), with a target to rise to 1.1660. At 1.1660, I plan to exit the market and also sell the euro in the opposite direction, expecting a 30–35 pip move from the entry. Expect euro strength only after very strong data. Important! Before buying, make sure the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the euro today in the event of two consecutive tests of 1.1620 when the MACD indicator is in an oversold area. This will limit the pair's downside potential and lead to an upward reversal. One can expect a rise toward the opposite levels of 1.1636 and 1.1660.

Sell scenarios

Scenario No. 1: I plan to sell the euro after the level 1.1620 (the red line on the chart) is reached. The target will be 1.1596, where I plan to exit the market and buy immediately in the opposite direction (expecting a 20–25 pip move in the opposite direction from that level). Pressure on the pair will return today with weak data. Important! Before selling, make sure the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: I also plan to sell the euro today in the event of two consecutive tests of 1.1636 when the MACD indicator is in an overbought area. This will limit the pair's upside potential and lead to a downward reversal. One can expect a decline toward the opposite levels of 1.1620 and 1.1596.

What to Look for on the Chart:

• Thin Green Line – Entry price at which you can buy the trading instrument;
• Thick Green Line – Estimated price where you can set Take Profit or manually secure profits, as further growth above this level is unlikely;
• Thin Red Line – Entry price at which you can sell the trading instrument;
• Thick Red Line – Estimated price where you can set Take Profit or manually secure profits, as further decline below this level is unlikely;
• MACD Indicator. When entering the market, it's important to consider overbought and oversold zones.

Important: Beginner traders in the Forex market need to be very cautious when making entry decisions. It is best to stay out of the market ahead of significant fundamental reports to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you do not employ money management practices and trade large volumes.

Also, remember that successful trading requires a clear trading plan, similar to the one provided above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for intraday traders.