Analysis of Macroeconomic Reports:

Very few macroeconomic reports are scheduled for Wednesday, yet Tuesday showed that the market continues to ignore most of them. For example, yesterday, traders did not react at all to the important UK unemployment report. Today, the only report of the day will come from the UK, covering March inflation. This report is interesting as it will show the impact of rising energy prices amid the war in the Middle East on consumer prices. The higher inflation rises in the coming months, the greater the likelihood of the Bank of England tightening monetary policy. However, it is worth reiterating that the market is currently ignoring most macroeconomic and fundamental data.

Analysis of Fundamental Events:

Among the fundamental events on Wednesday are speeches from the European Central Bank's chief economist, Philip Lane, and ECB President Christine Lagarde. However, the market continues to ignore the role of monetary policy, making statements from representatives of the ECB, the Federal Reserve, and the Bank of England less significant at this time. No one expects the Fed to tighten monetary policy in 2026, while the BoE and ECB may raise key rates amid accelerating inflation. Yet the geopolitical backdrop is changing almost daily, causing central banks to hesitate in making important monetary policy decisions. For instance, this week, the war in the Middle East may resume if a deal between Iran and the US is not signed. And how can a deal be signed if Iran is not agreeing to the second round of negotiations? However, judgments should be made based on concrete facts: either a resumption of the war or negotiations and an extension of the ceasefire.

General Conclusions:

During the third trading day of the week, both currency pairs may continue to correct, but traders would be better off focusing on technical levels and factors. The euro can be traded today in the range of 1.1745-1.1754, while the British pound can be traded in the range of 1.3476-1.3489. We still do not see grounds for strong and sustained growth of the US dollar (when considering all factors, not just geopolitics), so we expect a resumption of the 2025 trend with updates to 4-year highs for both the euro and the pound.

Key Principles of the Trading System:

1. The strength of the signal is determined by the time it took to form the signal (bounce or level breakthrough). The shorter the time, the stronger the signal.
2. If two or more trades were opened around any level based on false signals, all subsequent signals from that level should be ignored.
3. In a range, any pair can generate a lot of false signals or may not generate them at all. Technical levels may be ignored.
4. On the hourly timeframe, it is advisable to trade MACD signals only when volatility is good, and the trend is confirmed by a trendline or trend channel.
5. If two levels are located too close together (5-20 pips apart), they should be considered a support or resistance area.
6. After moving 15 pips in the correct direction, a Stop Loss should be set to breakeven.

What to Look for on the Charts:

Price levels of support and resistance are levels that serve as targets when opening buys or sells. Take Profit levels can be placed around them.

Red lines represent channels or trend lines that show the current trend and indicate the direction in which it is preferable to trade now.

The MACD indicator (14,22,3) – the histogram and the signal line – is a supporting indicator that can also be used as a source of signals.

Important speeches and reports (always included in the news calendar) can significantly affect the movement of the currency pair. Therefore, during their release, trading should be done with utmost caution, or traders should exit the market to avoid sharp price reversals against the previous movement.

Beginning traders in the forex market should remember that not every trade can be profitable. Developing a clear strategy and effective money management are the keys to long-term trading success.