Analysis of Macroeconomic Reports:

There are a few macroeconomic reports scheduled for Wednesday, but one report stands out. It concerns the UK consumer price index for May. Recall that in the previous month, inflation in Great Britain unexpectedly slowed, significantly reducing the likelihood of at least one tightening of the Bank of England's policy in 2026. Today, inflation in Britain is expected to rise slightly to 3%. However, if the Strait of Hormuz is opened soon, the British central bank is unlikely to take the risk of raising rates, as this move would slow down the economy. In the U.S., a retail sales report will be released today, which is objectively secondary given the British inflation report and the Federal Reserve meeting.

Analysis of Fundamental Events:

Among the fundamental events on Wednesday, the Fed meeting should be noted first and foremost. The market is confident that the American central bank will keep the key interest rate unchanged, but we still do not know which policies and views the new Fed Chair, Kevin Warsh, will adhere to. Thus, Warsh's speech will be the day's key event. Also today, Christine Lagarde, the head of the European Central Bank, will deliver a speech; however, we do not expect any market reaction to this event. Last week, the ECB raised key rates, but the European currency did not see any surge in strength afterward. The market simply ignored this event.

The geopolitical background is gradually improving. Iran and the U.S. are expected to sign a framework agreement on Friday; however, many important questions remain unresolved. In particular, the "nuclear issue," which does not even appear in the current text of the agreement. This is precisely the problem that started the war and could lead to its resumption at any moment. Thus, market optimism regarding a ceasefire between Iran and the U.S. is quite restrained, and the dollar is in no hurry to fall.

General Conclusions:

On the third trading day of the week, both currency pairs may trade quite volatically, as the results of the Fed meeting will be announced today. The euro can be traded from the 1.1584-1.1594 area, and the British pound from the 1.3456-1.3476 area. Geopolitics remains a key driver in the currency market, but today, market attention may shift to economic reports and Warsh's speech.

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.