The EUR/USD currency pair was unable to continue the downward correction or trend that began on Friday during Monday's trading. Overall, we had warned that strong movements were unlikely on Monday. The macroeconomic backdrop was very weak, and no other significant events occurred. Yesterday, only Germany's August inflation report was released, and it was more disappointing than encouraging. Inflation rose, but it increased less than traders expected. Thus, on the one hand, the chances of a second tightening of the European Central Bank's monetary policy are growing as inflation rises. However, the pace of inflation growth may be low enough to prompt aggressive action by the ECB. In any case, final conclusions will be drawn after the publication of the European inflation data today. It's important to remember that Germany is just one of the 27 countries in the Eurozone. Therefore, German inflation is not a definitive indicator. A significant amount of important data will be published in the U.S. this week, so we expect much stronger movements later in the week than on Monday.
On the 5-minute timeframe on Monday, one buy signal was formed. During the European trading session, the price rebounded from the 1.1584-1.1594 area, allowing novice traders to open a relatively simple, straightforward buy trade. The rise of the European currency may continue today, but it's important to remember the macroeconomic events that could affect the pair's movements.
On the hourly timeframe, the EUR/USD pair began a correction after a month of growth. Considering all the events of recent months, we believe that the European currency should continue to rise steadily even without local support. The American currency currently has no factors for growth, so we continue to expect upward movement.
On Tuesday, novice traders may consider short positions targeting 1.1527-1.1531 if price settles below the 1.1584-1.1594 area. Long positions can be maintained after a rebound from the 1.1584-1.1594 area, targeting 1.1655-1.1665.
On the 5-minute timeframe, the following levels should be considered: 1.1366-1.1377, 1.1461-1.1474, 1.1527-1.1531, 1.1584-1.1594, 1.1655-1.1665, 1.1745-1.1754, 1.1830-1.1837. Inflation data for August is scheduled for publication in the Eurozone on Tuesday, and in the U.S., the JOLTS and ISM reports for the manufacturing sector will also be released. Market reactions to this data can be expected.
Price levels (areas) of support and resistance are levels that serve as targets when opening buy or sell trades, or as sources of signals.
Red lines indicate channels or trend lines that illustrate the current trend and show the preferred direction for trading at the moment.
The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary indicator that can also be used as a source of signals.
Important speeches and reports (contained in the news calendar) can significantly influence the movement of currency pairs. Therefore, during their release, trading should be approached with utmost caution, or traders should exit the market to avoid sudden reversals against the preceding movement.
Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.
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