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The test of the price at 1.1716 coincided with the moment when the MACD indicator had already moved significantly above the zero mark, which limited the pair's upward potential. The second test at 1.1716 triggered Scenario #2 for selling euros, resulting in a 15-pip decline in the pair.
The sharp drop in the euro against the dollar followed the report that the US Producer Price Index (PPI) rose 1.4% month-on-month in April. Year-on-year, the figure reached 6.0%. The main culprit, as expected, was energy: approximately three-quarters of the increase in goods prices was attributed to a surge in energy prices—specifically, gasoline prices rose by 15.6%. However, it would be a mistake to attribute everything solely to the war and the situation in the Strait of Hormuz. The services index also rose by 1.2%—the highest since March 2022 —of which two-thirds was driven by a 2.7% increase in trade markups, indicating that tariff costs are increasingly being passed on to consumers.
Today's data on the consumer price index in Spain is unlikely to significantly affect the market's balance of power. Against this backdrop, the euro will remain relatively weak, which could lead to a new wave of selling in the EUR/USD pair.
As for the intraday strategy, I will rely more on implementing scenarios No. 1 and No. 2.
Scenario #1: I plan to buy euros today upon reaching an entry price around 1.1722 (green line on the chart), targeting a rise to 1.1747. At point 1.1747, I plan to exit the market and also sell euros in the opposite direction, anticipating a movement of 30-35 pips from the entry point. A strong rise in the euro can only be expected after good news from the Eurozone. Important! Before buying, ensure the MACD indicator is above the zero mark and just beginning to rise from it.
Scenario #2: I also plan to buy euros today if there are two consecutive tests of 1.1708 when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. One can expect growth towards the opposite levels of 1.1722 and 1.1747.
Scenario #1: I plan to sell euros after reaching the level of 1.1708 (red line on the chart), targeting a decline to 1.1681, where I plan to exit the market and immediately buy in the opposite direction, expecting a movement of 20-25 pips in the opposite direction from the level. Pressure on the pair could return at any moment today. Important! Before selling, ensure the MACD indicator is below the zero mark and just beginning its decline from it.
Scenario #2: I also plan to sell euros today if there are two consecutive tests of 1.1722 when the MACD indicator is in the overbought area. This will limit the upward potential of the pair and lead to a downward market reversal. One can expect a decline towards the opposite levels of 1.1708 and 1.1681.
Important: Beginner traders in the Forex market need to make entry decisions very cautiously. It is best to stay out of the market before important fundamental reports to avoid sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without placing stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade in large volumes.
And remember, for successful trading, it is essential to have a clear trading plan, as outlined above. Making impulsive trading decisions based on the current market situation is fundamentally a losing strategy for an intraday trader.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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