27.08.202606:01 Forex Analysis & Reviews: What to Watch for on August 27? Analysis of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

There are only two macroeconomic publications scheduled for Thursday, and neither is expected to have any significant impact on market sentiment. Germany will release the GFK consumer confidence index, while the U.S. will publish the unemployment claims report. However, we do not anticipate any market reaction to either report, so movements today may once again be extremely weak.

Analysis of Fundamental Events:

Among the fundamental events on Thursday, the start of the symposium in Jackson Hole stands out, with Federal Reserve Chair Kevin Warsh speaking tomorrow. Warsh will likely address monetary policy, and the market may react to his comments. However, we believe that Warsh's rhetoric will again be as vague and non-specific as possible. Thus, the question will be how the market interprets Warsh's words, which it can interpret in any way.

Immediately after Warsh took office as the central bank's chief, the market began to believe that tightening monetary policy was inevitable. However, in August, "hawkish" expectations started to fade, even though Warsh continues to insist that high inflation needs to be tackled.

The geopolitical backdrop still leaves much to be desired. The U.S. and Iran are currently not holding any negotiations, the Strait of Hormuz remains closed or partially closed, and Yemeni Houthis maintain a blockade of Saudi Arabia. Tehran has presented a list of demands to Washington necessary for opening the Strait, which Donald Trump will not comply with under any circumstances. Iran has also warned Washington that if the blockade of the strait is not lifted, it will carry out a "cleansing" of the strait using its own forces. Meanwhile, Trump has decided to conduct an unprecedented economic operation to destroy Iran and threatens to impose sanctions on all countries that interact with it. Iran has responded with threats to close other straits and routes if additional countries join the pressure from Washington.

General Conclusions:

During the penultimate trading day of the week, currency pairs may trade more actively, but only in the second half of the day. The euro can be traded today from the area of 1.1655-1.1665, while the British pound can be traded from the area of 1.3587-1.3598. Overall, we expect both the euro and the pound to strengthen further against the U.S. dollar.

Main Rules of the Trading System:

1. The strength of the signal is assessed by the time it took to form the signal (bounce or level breakthrough). The less time required, the stronger the signal.
2. If two or more trades are opened around a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can form a multitude of false signals or none at all. Technical levels may be disregarded.
4. When trading based on MACD signals on the hourly timeframe, it is advisable to do so only when volatility is high and a trend line or channel supports the trend.
5. If two levels are too close to each other (from 5 to 20 pips), they should be regarded as a support or resistance area.
6. After a 15-pip move in the correct direction, a Stop Loss should be set to break even.

What the Charts Show:

Support and resistance price levels (areas) are the targets when opening buy or sell orders or sources of signals.

Red lines denote channels or trend lines that reflect the current trend and indicate in which direction trading is currently favored.

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

Important speeches and reports (as listed in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be approached with utmost caution, or one should exit the market to avoid sharp price reversals against the preceding movement.

Beginners in Forex trading should remember that not every trade can be profitable. Developing a clear strategy and proper money management are essential for long-term trading success.