There are very few macroeconomic publications scheduled for Wednesday. The only noteworthy report is the ADP report on private-sector employment changes, but who cares about it now, especially given that last Friday the annual Nonfarm Payrolls report was released and another monthly report will come out this Friday? Thus, the market began a correction following a month of growth but is reluctant to force the issue, as important reports on the labor market and unemployment loom on the horizon.
Analysis of Fundamental Events:Among the fundamental events on Wednesday, the speech by European Central Bank representative Claudia Buch is notable. Given the acceleration in European inflation and the lack of pressure on the ECB from Donald Trump, the ECB may well implement a second monetary policy tightening this year. Therefore, upcoming speeches by ECB Monetary Committee representatives may provide hints about whether a rate hike in September is expected. Unfortunately, the market is currently paying much more attention to the dollar, the Federal Reserve, and Donald Trump, and may start paying attention to geopolitics again. Thus, even a new tightening from the ECB may not produce the expected effect on the euro.
The geopolitical backdrop still leaves much to be desired. The U.S. and Iran are not currently engaged in any negotiations; the Strait of Hormuz remains closed or partially closed, and the Yemeni Houthis maintain a blockade of Saudi Arabia. Trump has decided to carry out an unprecedented economic operation to eliminate Iran and threatens to impose sanctions against all countries that interact with it in any way. However, so far, no one has supported Trump's plan to eliminate Iran, and whether it will be implemented remains unknown. It has become known that the first U.S. strikes in a month were on launch sites near the Strait of Hormuz. Iran has responded by announcing a military operation against the U.S. and its allies in the region. The situation in the Middle East is heating up once again.
General Conclusions:During the third trading day of the week, currency pairs may trade rather weakly again. The euro can be traded today from the area of 1.1584-1.1594, while the British pound can be traded from the area of 1.3456-1.3476. Overall, we expect the decline to continue in the coming days, as the technical trends for both currency pairs have shifted to bearish.
Key Rules of the Trading System:The strength of a signal is determined by the time it takes to form the signal (rebound or breakout). The less time taken, the stronger the signal.If two or more trades were opened at a certain level based on false signals, all subsequent signals from that level should be ignored.In a range (flat), any pair can generate many false signals or may not produce any at all. Technical levels may be disregarded.On the hourly timeframe, trading signals from the MACD indicator should be acted upon only when volatility is high, and a trend line or trend channel confirms the trend.If two levels are positioned too close to each other (within 5-20 pips), they should be considered a support or resistance area.After moving 15 pips in the right direction, a stop-loss should be set to break even.What to Look for on the Charts:Price levels (areas) of support and resistance are levels that serve as targets when opening buy or sell trades, or as sources of signals.
Red lines indicate channels or trend lines that illustrate the current trend and show the preferred direction for trading.
The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary 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 currency pairs. Therefore, during their release, trading should be approached with utmost caution, or traders should exit the market to avoid sudden reversals against the preceding movement.
Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.