There are a few macroeconomic reports scheduled for Tuesday. In Germany, the second inflation estimate for April will be released today, which is objectively much less interesting to the market than the first estimate. Additionally, the ZEW Economic Sentiment Indexes for May will be published in Germany and the Eurozone, but these data are not significant either. In the US, a secondary ADP report on the labor market for the week and an April inflation report will be released. We believe that only the consumer price index could provoke a noticeable market reaction.
Analysis of Fundamental Events:There is also nothing significant to highlight among the fundamental events of Tuesday. It should be noted that the positions of all central banks on monetary policy are well known to traders, and the market is currently ignoring fundamentals and macroeconomic factors. There is no expectation of a change in the Federal Reserve's key rate in the coming months, while the European Central Bank and the Bank of England may tighten policy if the situation in the Middle East does not improve and inflation continues to accelerate.
The geopolitical backdrop has begun to change, but unfortunately, words suggest one thing, while facts indicate another. In theory, Iran and the US are on the verge of signing a preliminary agreement that would allow for a complete ceasefire, begin the process of unlocking the Strait of Hormuz, and agree on the conditions for long-term peace in the Middle East. However, in practice, the parties have violated the ceasefire three times in the past seven days, and another round of negotiations has failed miserably. While it is good that the parties agreed to continue dialogue, if there is no progress, the conflict will inevitably resume.
General Conclusions:During the second trading day of the week, both currency pairs may trade rather sluggishly. In fact, both the euro and the pound have been trading in a flat or near-flat movement for several weeks. The euro can be traded today from the area of 1.1745-1.1754, and the British pound from the area of 1.3587-1.3598; however, volatility may again be low. We await new developments regarding the conflict between Iran and the US and continue to monitor American inflation.
Main Rules of the Trading System:The strength of the signal is determined by the time it took to form the signal (bounce or breakout of the level). The less time it took, the stronger the signal.If two or more trades were opened near any level based on false signals, all subsequent signals from this level should be ignored.In a flat market, any pair can generate many false signals or none at all. Technical levels may be ignored.On the hourly timeframe, it is preferable to trade signals from the MACD indicator only in the presence of good volatility and a trend that is confirmed by a trend line or trend channel.If two levels are too close together (5-20 pips apart), treat them as a support or resistance zone.After a move of 15 pips in the right direction, a Stop Loss should be set to breakeven.What is on the Charts:Price levels (areas) of support and resistance – levels that are targets when opening purchases or sales, or sources of signals.
Red lines – channels or trend lines that display the current trend and indicate which direction is preferable to trade now.
MACD indicator (14, 22, 3) – histogram and signal line – a supporting 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 the currency pair. Therefore, during their release, trading should be done as cautiously as possible, or one should exit the market to avoid a sharp price reversal against the preceding movement.
Beginners trading in the Forex market should remember that not every trade can be profitable. Developing a clear strategy and sound money management are key to long-term trading success.