25.01.202210:22 Forex Analysis & Reviews: Analysis and trading tips for EUR/USD on January 25

Analysis of transactions in the EUR / USD pair

A signal to buy emerged after EUR/USD hit 1.133, however, the MACD line was in the overbought area, so the upside potential was limited. Then, by mid-day, the pair fell to 1.1314, but since the indicator was far from zero, traders could not take short positions as it was risky. No other signal appeared for the rest of the day.

Although the mixed data from the Euro area did not allow the euro to recover properly against the dollar, reports from the US came out weaker than expected, so the downside potential of EUR/USD was limited. But today there is a chance that the pair will dip lower as IFO reports from Germany regarding business climate, present situation and economic expectations may come out below expectations. The US will also publish data on manufacturing activity and house prices, followed by a report on consumer confidence, which is more important as it may lead to a drop in dollar demand. Markets will be cautious as ahead is another Fed meeting, so do not expect much activity, especially in risky assets. This means that it is better to bet on dollar rather than euro

For long positions:

Buy euro when the quote reaches 1.1320 (green line on the chart) and take profit at the price of 1.1351. Growth will occur if data from Germany exceed expectations.

Before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.1305, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.1320 and 1.1351.

For short positions:

Sell euro when the quote reaches 1.1305 (red line on the chart) and take profit at the price of 1.1282. Weak data from Germany will bring pressure back in the market, especially ahead of the Fed meeting on Wednesday.

Before selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro could also be sold at 1.1320, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.1305 and 1.1282.

What's on the chart:

The thin green line is the key level at which you can place long positions in the EUR/USD pair.

The thick green line is the target price, since the quote is unlikely to move above this level.

The thin red line is the level at which you can place short positions in the EUR/USD pair.

The thick red line is the target price, since the quote is unlikely to move below this level.

MACD line - when entering the market, it is important to be guided by the overbought and oversold zones.

Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.