Analysis of Macroeconomic Reports:

Quite a few macroeconomic reports are scheduled for Monday, but only one truly important one. This concerns the U.S. ISM Manufacturing PMI. It's worth recalling that two business activity indices are published in the U.S.: ISM and S&P. The latter is considered much less significant than the former. Manufacturing PMIs will also be released in Germany, the UK, and the EU, and for these locations, the indices are more meaningful than for the U.S. However, these are still far from the most critical indicators.

Analysis of Fundamental Events:

Among the fundamental events on Friday, we can highlight speeches from Federal Reserve representatives Christopher Waller and Lorie Logan and European Central Bank President Christine Lagarde. At first glance, Lagarde's speech seems important, but it should be noted that the ECB is firmly following a monetary policy line directed toward easing. As early as next week, rates might be cut again, and Lagarde's speech is unlikely to provide traders with any new information or influence the ECB's decision.

As we've mentioned before, speeches from central bank officials have no significant impact on the market because their policies and stances are already 100% clear. The market continues to trade solely on the "Trump factor."

We believe that the only thing that still matters for the market is the trade war, which, although slowly de-escalating, is ongoing. The dollar's decline could continue if trade agreements with most countries cannot be signed or negotiations are dragged out. The dollar may continue to fall even without new tariffs from Trump because the market's sentiment toward the U.S. president and his policies remains extremely negative. The International Trade Court initially ruled to block Trump's tariffs but later reversed its decision.

Conclusions:

On the first trading day of the new week, both currency pairs (EUR/USD and GBP/USD) may begin to decline again, as a technical correction seems due. At the same time, we see no strong reasons for a sustained rise in the U.S. dollar. The upward trend in both pairs may have ended for now, as there are no signs of a new escalation in the trade war and no real signs of de-escalation. Trading should now be based on technical analysis.

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.