strengthening

Analysis of transactions and tips for trading EUR/USD The test of 1.0929 on Monday afternoon, coinciding with the significant rise of the MACD line from zero, limited the upward potential of the pair. The Bundesbank report dealt no impact on market sentiment yesterday, allowing EUR/USD to rise, albeit briefly.     This momentum may extend to today as the data on ECB's balance of payments will not affect the pair's direction, while the speech of ECB Vice President Luis de Guindos, which will undoubtedly maintain a hawkish tone, will sustain demand for euro even under current conditions. Market volatility will most likely return today.     For long positions: Buy when euro hits 1.0935 (green line on the chart) and take profit at the price of 1.0964. Although a strong growth may not appear today, buyers will start returning to the market, leading to the strengthening of the pair. However, when buying, traders should make sure that the MACD line lies above zero or rises from it. Euro can also be bought after two consecutive price tests of 1.0911, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0935 and 1.0964.   For short positions: Sell when euro reaches 1.0911 (red line on the chart) and take profit at the price of 1.0878. Pressure may return in the event of inactivity at the daily highs. However, when selling, traders should make sure that the MACD line lies below zero or drops down from it. Euro can also be sold after two consecutive price tests of 1.0935, but the MACD line should be in the overbought area as only by that will the market reverse to 1.0911 and 1.0878.   What's on the chart: Thin green line - entry price at which you can buy EUR/USD Thick green line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely. Thin red line - entry price at which you can sell EUR/USD Thick red line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely. MACD line- it is important to be guided by overbought and oversold areas when entering the market   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 decision based on the current market situation is an inherently losing strategy for an intraday trader.  

On Tuesday, the EUR/USD currency pair struggled to establish itself above the moving average line, failing to surpass the Murray level of "3/8"-1.0925, resuming its downward trend in the latter half of the day. However, to label this movement as a "decline" would be an overstatement, as the day's total volatility was merely 40 points. As such, the past week better embodies the idea of a "flat" market rather than a trending one. Currently, the currency market is experiencing a tranquil period.   The fundamental and macroeconomic landscapes are intact, but the market appears saturated by them. Time and again, macroeconomic reports are in line with market expectations. Statements by representatives of the Fed and ECB do not offer traders any new or crucial information. The euro continues to maintain a relatively high position but has been static in recent weeks. The subject of interest rates is becoming less pertinent to traders. It's worth noting that when a monetary tightening or easing cycle initiates, the market endeavors to anticipate it. If this happens concurrently in two or more countries, as is usually the case, the market also strives to consider all changes preemptively.     For instance, last year, the Fed began raising rates ahead of the ECB, resulting in an initial surge in the dollar's value (taking geopolitics into account). Subsequently, as inflation in the US began to ease, the euro began to appreciate. It has been on an upward trend for the past ten months, although it has been largely consolidating in the 1.05–1.11 range for the last 5–6 months. Consequently, we do not foresee any significant triggers for a sudden upswing in the value of the euro or the dollar.   The pair will likely continue to consolidate within the outlined range, and it might take considerable time before this process reaches completion. The market has already accounted for 90% of all forthcoming interest rate hikes by the Fed and ECB.   Currently, neither the euro nor the dollar holds a distinct advantage. Many experts have been forecasting a downturn, recession, and deceleration for the US economy, particularly for the labor market. These predictions have been circulating since last year, yet official statistics suggest no signs of a looming recession.   Over the past three quarters, the US economy has grown by at least 2%, significantly more than the growth observed in the European Union or Britain. The labor market continues to demonstrate robust performance month after month, even with the Fed's rate escalating to 5.25%. Unemployment has seen minimal growth, while Nonfarm Payrolls consistently reveal at least 200 thousand new job additions each month.     As such, the Fed can continue its monetary tightening policy as required, especially now that inflation has fallen to 4%. This factor might play against the dollar in the medium term. Since inflation is already approaching the target level, the Federal Reserve will begin to soften monetary policy in 2024. It is unknown when the ECB, dealing with higher inflation, will begin to soften. Nevertheless, inflation in the Eurozone continues to decrease steadily. It initially rose more than in the US. Hence, it needs more time to return to 2%. However, the ECB began raising the rate after the Fed. Thus, everything is in its place. The European regulator may start reducing the rate a few months later than the Fed.   The monetary policy of the Fed and the ECB currently does not imply a strong strengthening of the dollar or the euro. The average volatility of the euro/dollar currency pair for the last five trading days as of July 5 is 70 points and is characterized as "average." Thus, we expect the pair to move between levels 1.0779 and 1.0915 on Wednesday. A reversal of the Heikin Ashi indicator upwards will indicate a new round of upward movement.

In the dynamic world of foreign exchange, understanding the factors driving currency movements is crucial for investors and traders alike. Today, we turn our attention to the Norwegian economy and the implications of recent data releases and policy actions by the central bank, as we engage in a conversation with renowned analyst Valeria Bednarik. With her vast expertise and deep insights into the foreign exchange market, Bednarik sheds light on the latest developments surrounding the Norwegian krone (NOK) and its performance against major currencies. The Norwegian economy has been making headlines due to the actions taken by the Norges Bank, which has adopted a more aggressive stance compared to its European counterpart, the European Central Bank (ECB). In June, the Norges Bank raised the key policy rate by an impressive 50 basis points to reach 3.75%, marking a 15-year high. This bold move by Governor Ida Wolden Bache reflects concerns over the potential entrenchment of inflation and suggests that rates could further increase to 4.25% by autumn.   Read more on FXStreet   FXMAG.COM:  How would you comment on the latest data from the Norwegian economy and the actions of the central bank there, and what about the Norwegian krone as a result?   Valeria Bednarik: The NOK benefited from the Norges Bank's decision to become more aggressive than the European Central Bank. The NB hiked the key policy rate by 50 basis points (bps) to 3.75% in June, a 15-year high. Governor Ida Wolden Bache warned about the risk of inflation becoming entrenched,  indicating rates could reach 4.25% by autumn.   Following the announcement, the Norwegian krone strengthened against most major rivals, the Euro included. Wolden Bache was spot on, as inflation in the country was up by 6.7% YoY in May 2023 from 6.4% in the previous month and surpassing expectations of a 6.2% increase. It was also higher than the EU inflation, which hit 6.1% YoY in May.