Analysis of Macroeconomic Reports:

A considerable number of macroeconomic reports are scheduled for Wednesday. Germany, the Eurozone, and the United States will all release Q2 GDP reports. It is worth noting that while GDP reports are considered important, the market does not always react strongly to them. What truly matters is not the absolute value of the data but whether it matches or deviates from forecasts. The US will also publish the ADP report on private sector employment changes. This report is of interest and can provoke a market reaction, but traders will base their conclusions about the labor market on Friday's NonFarm Payrolls report.

Analysis of Fundamental Events:

Among Wednesday's fundamental events, the FOMC meeting stands out. Although no major decisions are expected—with a 99% probability—Jerome Powell's press conference could provide guidance to the market on what to expect next. It is worth recalling that most traders and FOMC members anticipate two rate cuts in the second half of the year. However, everything will depend on inflation, and Powell is likely to emphasize this again during the evening speech.

The trade war remains the top concern for the market, especially after Monday's developments. We still believe that any trade deal that retains tariffs is essentially the same trade war, just "under a different label." Agreements like the one recently signed with the EU are advantageous for the US. Therefore, each similar new deal could support the US dollar in the short term. However, on a broader, more fundamental level, the market is still digesting the new trade architecture and Donald Trump's protectionist policies. In our view, such a foundation does not support a long-term dollar rally. Hence, we continue to view the current dollar strength as merely a downward correction in other currencies.

Conclusions:

On the third trading day of the week, both EUR/USD and GBP/USD will trade in line with fundamental and macroeconomic drivers. Since there are plenty of important events today, both pairs may change direction multiple times during the day. The euro retains short-term downside potential, and selling from the 1.1563–1.1571 area with targets at 1.1527 and 1.1474 remains a viable strategy. For the pound, the likelihood of further decline is even higher.

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.