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The test of the 1.0427 level coincided with the MACD indicator beginning to move downward from the zero mark, confirming a valid sell signal in line with the prevailing downtrend. As a result, the pair dropped by 27 points, though it did not reach the 1.0400 target level.
Weak German and eurozone economic data were the primary drivers behind the euro's decline in the first half of the day. Now, investors and analysts will shift their focus to Fed Chair Jerome Powell's key statements, looking for clues about future U.S. monetary policy.
With each Fed announcement, the central bank provides more insight into how long the current rate stance will be maintained and whether adjustments might be made in response to economic shifts. Additionally, risks affecting Fed policy decisions—such as imported inflation from Trump's trade tariffs and global economic instability—are closely monitored.
When Powell addresses journalists, he may also provide clarifications on the labor market. While the U.S. economy remains relatively strong, his remarks could shed light on how employment conditions might influence future monetary policy decisions.
A dovish tone and indications of potential rate cuts would weaken the dollar and push the euro higher. Conversely, a hawkish stance would trigger strong demand for the U.S. dollar, leading to further euro depreciation.
For today's intraday trading, I will primarily focus on Scenario #1 and Scenario #2.
Important! Before entering a sell trade, ensure that the MACD indicator is below the zero mark and just beginning to decline.
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