22.06.202308:14 Forex Analysis & Reviews: Overview of fundamental events for beginners

Overview of macroeconomic reports

Jerome Powell's congressional testimony was the first event this week to trigger a market buzz, in particular notable moves in the euro. Besides, the catalyst for the pound sterling was the UK inflation report. Before these events, the market traded almost flat with minor volatility. On Thursday there will be very important, fundamental events for the pound, but for the euro and the dollar, there will be only one macroeconomic report: US weekly unemployment claims. This report is of secondary importance. Although it reflects the state of the labor market, its readings rarely deviate from forecasts, so the market commonly gives a muted response. However, if we see such a deviation today, then both EUR/USD and GBP/USD could make a movement of 30-40 pips. However, the pound today will be sensitive to the meeting of the Bank of England.

Overview of fundamental events

The Bank of England's policy meeting certainly stands out in the economic calendar today. No one doubts that the key rate will rise by another 0.25% in a few hours, and some experts, after yesterday's inflation report, believe that the interest rate may increase even by 0.5%. We do not believe this will happen, but in any case, GBP/USD is set to trade with higher volatility.

Jerome Powell's second testimony in the US Congress should also be highlighted. Yesterday, the first speech triggered a strong movement in both currency pairs. It is unlikely that Mr. Powell will say anything sensational today, but he did not report anything new yesterday either.

Therefore, this event can also have a significant impact on the movement of both instruments.

All other events are of secondary, background nature. The European Union will host another speech by Luis de Guindos, and in the US, several policymakers of the Federal Open Market Committee will share their views on the current state of affairs in the economy and monetary policy. The FOMC leaders Loretta Meister, Christopher Waller, Michelle Bowman, and Thomas Barkin will make their comments. All speeches can be considered significant, but the market now understands very well what to expect from the Fed as the last two speeches by Powell gave an exhaustive answer to this question.

Bottom line

There will be plenty of important and simply interesting events on Thursday. Of course, traders should focus on the BoE meeting and Powell's second testimony. However, all other events may also make an impact on both EUR/USD and GBP/USD.

Main rules of the trading system:

• The strength of the signal is calculated by the time it took to form the signal (bounce/drop or overcoming the level). The less time it took, the stronger the signal.
• If two or more trades were opened near a certain level due to false signals, all subsequent signals from this level should be ignored.
• In a flat market, any currency pair can generate a lot of false signals or not generate them at all. But in any case, as soon as the first signs of a flat market are detected, it is better to stop trading.
• Trades are opened in the time interval between the beginning of the European session and the middle of the American one when all trades must be closed manually.
• On the 30-minute timeframe, you can trade based on MACD signals only on the condition of good volatility and provided that a trend is confirmed by the trend line or a trend channel.
• If two levels are located too close to each other (from 5 to 15 points), they should be considered as an area of support or resistance.

Comments on charts

Support and resistance levels are levels that serve as targets when opening long or short positions. Take Profit orders can be placed around them.

Red lines are channels or trend lines that display the current trend and show which direction is preferable for trading now.

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

Important speeches and reports (always found in the news calendar) can significantly influence the movement of a currency pair. Therefore, during their release, it is recommended to trade with utmost caution or to exit the market to avoid a sharp price reversal against the previous movement.

Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and money management is the key to success in trading over a long period of time.