Analysis of Macroeconomic Reports:

Several macroeconomic releases are scheduled for Wednesday. The most important report is the UK inflation data, which will be published within the hour. While we do not believe this report is as significant for the market as the U.S. inflation release, a market reaction is still possible. The Bank of England's current stance is clear: since inflation has surged sharply in recent months (and is unlikely to decline in June), there is no talk of a key rate cut for now.

As for the impact of this report on the GBP/USD pair, the pound has been declining for several weeks on purely technical grounds. The decline could continue due to formal reasons, such as a 0.1% slowdown in inflation.

In the U.S., the Producer Price Index (PPI) and Industrial Production figures will be released today. These are not major reports, but the market may still react to them.

Analysis of Fundamental Events:

Among Wednesday's fundamental events are new speeches from FOMC members Hummack, Barr, and Williams. However, as we've noted before, the Federal Reserve's stance on monetary policy remains unchanged. And the market (as evidenced by yesterday's events) continues to interpret key reports based on its expectations, rather than the Fed's official stance.

The trade war remains the market's main concern, and we still see no signs of resolution. Tensions are escalating, as Donald Trump has managed to finalize only three trade deals, one of which is highly questionable. Moreover, what's there to celebrate if all the tariffs remain in effect?

Over the past week and a half, the U.S. president has decided to further raise tariffs on countries that are reluctant to negotiate with Washington (i.e., almost all of them), while also increasing import duties on copper, pharmaceuticals, and semiconductors. As we can see, the situation is not improving with time. Therefore, the current rise in the dollar should not be misleading.

Conclusions:

On the third trading day of the new week, both currency pairs may experience low activity, as there are few important events scheduled. Technical corrections are still underway, but they may end at any moment. Both pairs have descending trendlines, and breaking above them would signal a resumption of the 6-month uptrend.

Key Rules for the Trading System:

1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
3. Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
5. MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
6. Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
7. Stop Loss: Set a Stop Loss to breakeven after the price moves 15–20 pips in the desired direction.

Key Chart Elements:

Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.

Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.

MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.

Important speeches and reports, which are consistently featured in the news calendar, can significantly influence the movement of a currency pair. Therefore, during their release, it is advisable to trade with caution or consider exiting the market to avoid potential sharp price reversals against the prior trend.

Beginners in the Forex market should understand that not every transaction will be profitable. Developing a clear trading strategy and practicing effective money management are crucial for achieving long-term success in trading.