Analysis of Macroeconomic Reports:

Several macroeconomic reports are scheduled for Tuesday, May 19. The most interesting data will come from the UK—reports on unemployment, changes in unemployment numbers, and wages. However, we do not believe that the market's reaction to these data will be significant. The geopolitical factor remains the most important for traders. In the US, there will be an utterly unnecessary weekly ADP report, while the Eurozone's event calendar is completely empty.

Analysis of Fundamental Events:

Among the fundamental events on Tuesday are the speeches of Christopher Waller (Federal Reserve) and Philip Lane (European Central Bank). Last week, it became known that the ECB may raise the key interest rate at the next meeting, while the Fed will wait until the fourth quarter to assess inflation and make a decision. However, hawkish expectations regarding the Bank of England have sharply declined after the market saw forecasts for UK April inflation. It is expected that inflation may drop to 3%, which would make Britain one of the few countries to avoid accelerating inflation amid the war in the Middle East and the closure of the Strait of Hormuz. In this case, there would be no grounds for the British central bank to raise the key interest rate.

The geopolitical backdrop has become slightly more positive and optimistic, but we must remind ourselves that new pessimistic data could arrive at any moment. Washington and Tehran still cannot agree on the most important issues, so the market must be content that negotiations have not yet completely broken down.

General Conclusions:

On the second trading day of the week, both currency pairs may trade somewhat sluggishly, but any geopolitical news could spark a new market storm. On Monday, the US dollar lost ground amid conciliatory messages from the White House, but it is crucial for the conflict to return to a path of de-escalation. The euro can be traded today in the range of 1.1655-1.1666, while the British pound can be traded in the ranges of 1.3380-1.3386 and 1.3456-1.3476. Geopolitics remains the key influencing factor in the currency market.

Main Rules of the Trading System:

1. The strength of the signal is determined by the time it took to form the signal (bounce or breakout of the level). The less time it took, the stronger the signal.
2. If two or more trades were opened near any level based on false signals, all subsequent signals from this level should be ignored.
3. In a flat market, any pair can generate many false signals or none at all. Technical levels may be ignored.
4. On the hourly timeframe, it is preferable to trade signals from the MACD indicator only in the presence of good volatility and a trend that is confirmed by a trend line or trend channel.
5. If two levels are too close together (5-20 pips apart), treat them as a support or resistance zone.
6. After a move of 15 pips in the right direction, a Stop Loss should be set to breakeven.

What is on the Charts:

Price levels (areas) of support and resistance – levels that are targets when opening purchases or sales, or sources of signals.

Red lines – channels or trend lines that display the current trend and indicate which direction is preferable to trade now.

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

Important speeches and reports (contained in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be done as cautiously as possible, or one should exit the market to avoid a sharp price reversal against the preceding movement.

Beginners trading in the Forex market should remember that not every trade can be profitable. Developing a clear strategy and sound money management are key to long-term trading success.