Macroeconomic Report Review:

There are several macroeconomic releases scheduled for Friday, but none of them are particularly significant. In Germany, reports on inflation, unemployment, and retail sales will be published; however, these data only pertain to a single country within the Eurozone, and inflation currently has a minimal impact on European Central Bank monetary policy. In the US, today's main report is the PCE index, which is considered a derivative of inflation. In other words, this index shows the change in prices for personal consumption. Typically, it ranges from 0.2% to 0.3% per month and does not usually elicit a strong market reaction. The main indicator for measuring inflation dynamics remains the Consumer Price Index (CPI).

Fundamental Events Review:

Among Friday's fundamental events, the speech by ECB Vice President Luis de Guindos stands out. Recall that the ECB has practically completed its cycle of monetary policy easing, and inflation in the Eurozone has stabilized around 2%, hardly reacting even to Donald Trump's tariffs. Thus, the ECB currently has no reason to lower rates further. Only if inflation continues to slow can we expect a new rate cut.

One of the main factors for traders remains the trade war. Since there are no signs of de-escalation, there is no reason for the market to make medium-term purchases of the dollar. This week, Trump raised tariffs to 50% for India. As before, the US currency may see local growth due to technical factors or individual events/reports, but nothing more.

General Conclusions:

On the final trading day of the week, both currency pairs will again be trading based on technical factors. The European currency may form a sell signal around the 1.1655–1.1666 area, or it may continue growing, following yesterday's buy signal in the same area. The pound sterling generated four sell signals yesterday in the 1.3518–1.3532 area, indicating a decline is possible on Friday. Market volatility remains low, with clear signs of a flat (sideways) market.

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.