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Several economic reports are set for release on Wednesday, but only one of them can be considered truly important. We are talking about the UK inflation report for June. Regardless of the significance of this report, it has a high chance of strongly influencing the pair's movement throughout the day. According to experts' forecasts, the consumer price index is expected to fall from the current 8.7% to 8.2-8.3%. This is good news, but inflation in the UK is still too high for the Bank of England to feel comfortable. We believe that the British central bank will raise the interest rate by another 0.25% at the next meeting, a decision that the market has already priced in. Based on logic, the British pound should decline on Wednesday, unless inflation unexpectedly rises or slows down significantly.
The euro area inflation report for June will be released in the second estimate, so this report will not have a strong impact on the market. It is even quieter in the United States. Data on building permits and housing starts will be published, which is of secondary importance.
There is absolutely nothing noteworthy about today's fundamental events. There are no important speeches or other significant events scheduled. The market will focus on the UK inflation report. The British pound may trade with considerable volatility on Wednesday, and it may also influence the euro.
One important report and three secondary reports lined up for release. We have already witnessed how the market reacts to secondary data. The situation is paradoxical. On the one hand, both pairs are heavily overbought and should decline. On the other hand, the strong uptrend has repeatedly pulled the pairs upward even when there were no significant reasons for it to do so. Naturally, we expect the euro and the pound to fall.
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.
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