Analysis of Macroeconomic Reports:

There are quite a few macroeconomic reports scheduled for Thursday, primarily focusing on indices of business activity in the services and manufacturing sectors in Germany, the EU, the UK, and the US. It is worth noting that the American indices hold little significance for traders since the U.S. has its own ISM business activity indices. In the current circumstances, European indices may provoke only a very weak market reaction, as traders continue to ignore much of the macroeconomic backdrop. This trend has persisted for two months. At this time, the market continues to await a resolution in the conflict in the Middle East.

Analysis of Fundamental Events:

There is nothing of real significance to highlight among the fundamental events on Thursday. This week has already seen two speeches by Christine Lagarde, yet the market continues to disregard the monetary policy factor, so statements from representatives of the European Central Bank, the Federal Reserve, and the Bank of England currently hold little importance. No one expects the Fed to tighten monetary policy in 2026, while the BoE and the ECB may raise key interest rates amid rising inflation. However, the geopolitical situation is changing almost daily, prompting central banks to hesitate before making important monetary policy decisions. For instance, fighting may resume in the Middle East soon if a deal between Iran and the US is not signed. However, a deal cannot be signed unless Iran agrees to a second round of negotiations. Judgments should be based on concrete facts: either the resumption of war or negotiations and an extension of the truce.

General Conclusions:

During the penultimate trading day of the week, both currency pairs may continue to correct, but traders would be better off relying 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. A downward correction for both currency pairs may continue in the near future, but the market is currently in a wait-and-see mode regarding the resolution of the Middle East conflict.

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.