There are very few macroeconomic reports scheduled for Friday, May 22. In Germany, the third estimate of first-quarter GDP, the consumer confidence index, and the business climate index will be released today. In the UK, there will be a retail sales report for April. In the US, the second estimate of the consumer sentiment index for May will be published. All of the above reports are secondary, and the market continues to largely ignore the macroeconomic background.
Analysis of Fundamental Events:Among the fundamental events on Friday, the speeches of Federal Reserve representatives (Christopher Waller) and European Central Bank (Philip Lane) can be noted. Market expectations regarding the Fed's monetary policy have recently become more "hawkish," but we're currently discussing a maximum of one tightening closer to the end of the year. Expectations for the ECB's monetary policy are currently contradictory. On the one hand, inflation is accelerating; on the other hand, the EU economy is showing signs of slowing. A rate hike in June seemed predetermined several weeks ago, but there are now doubts about the ECB's readiness for active hawkish actions. Thus, the speech of the ECB's chief economist, Philip Lane, may provide some clarity on monetary policy in June.
The geopolitical background this week has become somewhat more positive and optimistic, but it should be remembered that new pessimistic data may arrive at any moment. Negotiations between Washington and Tehran seem to have resumed and, according to the American president, are "very successful." However, it's important to note that Trump has made claims about breakthroughs in negotiations before. This does not prevent him from threatening Iran with new missile strikes the next day. There have been no confirmations from Iran regarding the success of diplomacy. Yesterday, it was reported that key points of the framework agreement had been agreed upon, but there is currently no confirmation of this.
General Conclusions:During the last trading day of the week, both currency pairs may trade fairly sluggishly, but any geopolitical news could trigger a new storm in the market. The euro can be traded today in the range of 1.1584-1.1591, while the pound sterling can be traded in the ranges of 1.3380-1.3386 and 1.3456-1.3476. Geopolitics remains the key influencing factor in the currency market.
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.