05.06.202606:03 Forex Analysis & Reviews: What to Focus on June 5? Analysis of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

There are a few macroeconomic reports scheduled for Friday, including important ones. We should start with the Eurozone GDP report for the first quarter, in its final assessment. It is expected that the US economy's growth rate will slow to 0.8%, which is unlikely to be considered a positive signal for the euro. In the United States, reports on Non-Farm Payrolls, the unemployment rate, and changes in average wages will be published. Naturally, the first two reports will attract traders' attention, but let us remind you that over the last three months, the market has ignored numerous important events and reports. Thus, a spike in volatility is possible today, but the flat for both currency pairs will likely continue.

Analysis of Fundamental Events:

Among the fundamental events on Friday, speeches by Swati Dhingra and Andrew Bailey from the Bank of England stand out. Speeches by central bank heads generate interest; however, they must convey something important and unexpected to the market to elicit a reaction, especially under current circumstances. This week, Bailey and Lagarde have already delivered speeches, but they did not provide any significant information to the market. Let us remind you that the only central bank that can change the key rate at the next meeting is the European Central Bank. The market is generally ready for this development, while simultaneously ignoring it, as the euro is not strengthening. There is no sense in expecting the BoE to raise rates after the April inflation report, given that inflation has slowed.

The geopolitical background still leaves much to be desired, as Iran and the US have come closer to resuming conflict and failing negotiations. Negotiations between Washington and Tehran continue, and according to the American president, they are "very successful." However, there has been no confirmation from Iran of the success of diplomacy. Quite the opposite. The parties regularly violate ceasefire conditions, and this week, Tehran outright expressed a desire to cease any diplomatic contacts with Washington.

General Conclusions:

During the last trading day of the week, both currency pairs may trade more volatily, as important reports will be released in the US. The euro can be traded today from the area of 1.1584-1.1591, while the British pound can be traded from the areas of 1.3380-1.3386 and 1.3456-1.3476. Geopolitics remains a key influencing factor in the currency market.

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 keys to success in trading over the long term.