01.07.202606:04 Forex Analysis & Reviews: What to Focus on July 1? Analysis of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

There are several macroeconomic rescheduled for Wednesday, and important ones among them will be released. We should start with the June inflation report for the Eurozone. Yesterday, Germany's consumer price index (CPI) fell to 2.3%, and today European inflation may slow to 3%. If this happens, the likelihood of the European Central Bank tightening monetary policy in 2026 will decrease significantly, creating additional pressure on the euro. In the US, the ADP labor market report and the ISM manufacturing index will be published today. We believe the market will not react to the ADP report, as traders will be waiting for the Nonfarm Payrolls report, while the ISM report may influence market sentiment.

Analysis of Fundamental Events:

Fundamental events on Wednesday include speeches from Andrew Bailey, Christine Lagarde, and Kevin Warsh. It is not guaranteed that all three central bank heads will discuss monetary policy and its prospects, but this can be expected. The market's greatest attention is currently focused on the Federal Reserve, so Warsh's speech holds particular value. The Fed has signaled its readiness to raise rates by the end of the year, but too much now depends on geopolitical factors and on Warsh himself, who was appointed by Donald Trump not to tighten monetary policy. Therefore, we do not rule out that the market is currently positioned more "hawkishly" than the Fed itself.

The geopolitical backdrop remains consistently "conditionally positive." Iran and the US have signed an agreement remotely; however, too many significant questions remain unresolved. In particular, the "nuclear issue," the war between Lebanon and Israel, and control over the Strait of Hormuz. Theoretically, the market may fear the resumption of a full-scale war, but this is obviously insufficient for the dollar to continue being in demand. After all, Tehran and Washington are still on the tracks leading to peace, and negotiations are ongoing, although no one expects them to be quick and easy.

General Conclusions:

On the third trading day of the week, both currency pairs may continue to correct after strong declines, but today fundamentals and macroeconomic factors may influence their movements. The euro can be traded from the area of 1.1420-1.1432, while the British pound can be traded from the area of 1.3259-1.3267. The market has been irrationally accumulating the US dollar over the past two weeks, which could be a long-term trap for bears.

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.