Analysis of Macroeconomic Reports:

Two macroeconomic publications are scheduled for Wednesday. In the Eurozone, the industrial production report for May will be released, while in the U.S., the Producer Price Index (PPI) for June will come out. Overall, the Producer Price Index currently holds little significance, as the June inflation report was published just yesterday, and both producer and consumer prices depend on energy costs, which in turn are influenced by the status of the Strait of Hormuz and the conflict in the Middle East. Therefore, inflation could have slowed last month and might rise in the coming month.

Analysis of Fundamental Events:

Among the fundamental events on Wednesday, we should note another speech by Federal Reserve Chair Kevin Warsh in the U.S. Congress, as well as speeches by Joachim Nagel, Lisa Cook, and Alberto Musalem. Of course, the market's main focus will be on Warsh's speech. However, Warsh already spoke in Congress yesterday and did not provide any new information to the markets or members of Congress. He confirmed that high inflation must be dealt with, but did not specify how. He also did not address the U.S. war in the Middle East, which is quite strange, as this war directly affects inflation. Therefore, in our view, Warsh is currently maintaining a neutral stance, and the desire to combat inflation does not always imply an increase in the key rate.

The geopolitical backdrop remains consistently "conditionally positive." Iran and the U.S. have signed an agreement, yet too many important questions remain unresolved. In particular, the "nuclear question," the war between Lebanon and Israel, and the status of the Strait of Hormuz. Theoretically, the market may fear a resurgence of full-scale war; however, this is clearly not enough for the dollar to begin rising actively again. After all, Tehran and Washington have not completely exited the negotiation process. Recent events in the Middle East demonstrate the fragility of any ceasefires between the U.S. and Iran. The Strait of Hormuz is currently under blockade again.

General Conclusions:

During the third trading day of the week, both currency pairs may move very sluggishly again, as no significant events are expected today. The euro can be traded from the area of 1.1461-1.1466, and the British pound from the area of 1.3380-1.3386. The euro remains within a sideways channel, while the pound is preparing for a downward correction.

Basic Rules of the Trading System:

1. The strength of a signal is evaluated based on the time it takes to form (bounce or breakout). The less time required, the stronger the signal.
2. If two or more trades were opened at a particular level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat market, any pair may generate many false signals or none at all. Technical levels may be overlooked.
4. On the hourly timeframe, trading signals from the MACD indicator should be executed only when volatility is good, and a trend is confirmed by a trend line or channel.
5. If two levels are too close together (5 to 20 pips), they should be considered a support or resistance area.
6. After moving 15 pips in the correct direction, a Stop Loss should be set at breakeven.

What's on the Charts:

Price levels (areas) of support and resistance are targets when opening long or short positions or sources of signals.

Red lines indicate channels or trend lines that display the current trend and indicate the preferred direction for trading.

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

Important speeches and reports (contained in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or one should exit the market to avoid sharp reversals against preceding movements.

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