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22.01.2025 09:34 AMThe test of the 1.0372 price level in the second half of the day coincided with when the MACD indicator began to move upward from zero, confirming a valid market entry point. As a result, the pair gained more than 50 pips.
The rise of the dollar today is partly due to increased demand for safe-haven assets, as political uncertainty surrounding the Trump administration creates nervousness in the forex market. Additionally, the strong U.S. economy, high interest rates, and the dollar's unmatched status as the world's dominant reserve currency strengthen its potential for further growth against various risk assets, including the euro.
Today's focus will be on the Bundesbank report and Christine Lagarde's comments, which could significantly impact the market. If the European Central Bank President hints at a readiness for a more cautious monetary policy, this could boost European asset prices and strengthen the euro. Investors seek clear signals on the central bank's next steps amid global economic uncertainty and Trump's new policies. It is important to note that current conditions demand flexibility from the ECB in its decision-making. While a 0.5% rate cut may seem radical, such measures might be necessary to support economic activity. Analyzing economic data shows that many sectors are still under pressure, which could prompt the ECB to act decisively. Therefore, advocates of a softer monetary policy will closely monitor the market's reaction to Lagarde's speech. If her comments are interpreted positively, the euro's position could weaken.
I will primarily focus on implementing Scenarios #1 and #2.
Scenario #1: Today, consider buying the euro upon reaching the 1.0427 price level (green line on the chart) with a target of 1.0476. At 1.0476, I plan to exit the market and sell the euro in the opposite direction, aiming for a movement of 30-35 pips from the entry point. Expect euro growth in the first half of the day, continuing the upward trend. Important! Before buying, ensure the MACD indicator is above the zero mark and starting to rise.
Scenario #2: I also plan to buy the euro today if there are two consecutive tests of the 1.0393 price level when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. Growth to the opposite levels of 1.0427 and 1.0476 can be expected.
Scenario #1: I plan to sell the euro after the price reaches 1.0393 (red line on the chart). The target will be the 1.0347 level, where I plan to exit the market and immediately buy in the opposite direction, targeting a movement of 20-25 pips in the reverse direction. Selling pressure on the pair may return at any moment. Important! Before selling, ensure the MACD indicator is below the zero mark and starting to decline.
Scenario #2: I also plan to sell the euro today if there are two consecutive tests of the 1.0427 price level when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downward. A decline to the opposite levels of 1.0393 and 1.0347 can be expected.
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*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
