Macroeconomic Report Review:

No major macroeconomic reports are scheduled for Wednesday, except for the minor GfK Consumer Confidence report in Germany. As a result, we are likely in for yet another "boring Monday." Volatility may be low, and even intraday trending could be absent.

Fundamental Events Review:

Among Wednesday's fundamental events, only the speech by FOMC member Thomas Barkin stands out. It's worth recalling that there is currently a heated debate in the market about whether the Federal Reserve will lower rates in September. Most believe it will, but everything depends on the upcoming employment and inflation reports. In any case, there aren't enough "doves" in the current FOMC lineup to resume monetary policy easing.

At best for the dollar, the Fed won't cut the key rate in September. But this is a relatively weak support factor for the US currency, as monetary policy would simply remain unchanged. A rate cut in the US is brewing, but when it will happen and how quickly further easing might follow remain unclear. Donald Trump continues to pressure the FOMC and is striving to change its composition to make the central bank more controllable.

For traders, the trade war remains the main factor. Since there are no signs of de-escalation, there's no apparent justification for medium-term dollar buying. As before, the US currency can look for occasional short-term rallies based on technicals or specific events/reports—no more than that.

General Conclusions:

During the third trading day of the week, both currency pairs will be trading on technical grounds. The euro formed two more sell signals near the 1.1655–1.1666 area; therefore, a further short-term drop toward 1.1571 can be expected. The pound sterling formed a new sell signal overnight near 1.3466–1.3475, so a decline is possible here as well. However, remember that there are very few factors favoring dollar strength, and volatility today may once again be weak.

Key Rules for the Trading System:

1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
3. Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
5. MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
6. Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
7. Stop Loss: Set a Stop Loss to breakeven after the price moves 15–20 pips in the desired direction.

Key Chart Elements:

Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.

Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.

MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.

Important speeches and reports, which are consistently featured in the news calendar, can significantly influence the movement of a currency pair. Therefore, during their release, it is advisable to trade with caution or consider exiting the market to avoid potential sharp price reversals against the prior trend.

Beginners in the Forex market should understand that not every transaction will be profitable. Developing a clear trading strategy and practicing effective money management are crucial for achieving long-term success in trading.