Analysis of Macroeconomic Reports:

There are very few macroeconomic reports scheduled for Friday—only one. This morning in the UK, the May retail sales report will be released. Earlier this week, far more important reports on inflation and unemployment were published in the UK, but the market paid them no attention. Therefore, retail sales will likely be ignored with 90% probability. We anticipate a corrective upward pullback today. We consider the recent rise in the U.S. dollar to be illogical and inconsistent with the fundamental and geopolitical backdrop.

Analysis of Fundamental Events:

Among the fundamental events on Friday, it's worth noting the speeches by European Central Bank representatives, particularly chief economist Philip Lane. However, it should be remembered that last week the ECB implemented its first policy tightening in the last three years, and Christine Lagarde clearly indicated that this might not be the last rate hike. Thus, the ECB's monetary position is entirely clear at this time, yet the market simply ignores it, since the tightening of the central bank's policy should have strengthened the national currency, which we did not observe in the case of the euro.

The geopolitical backdrop remains steadily "conditionally positive." Iran and the U.S. signed an agreement remotely; however, too many important questions remain unresolved. In particular, the "nuclear issue" is not even mentioned 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. At the same time, an agreement is an agreement, and a ceasefire is a ceasefire. However, the dollar is currently rising as if the Federal Reserve had increased rates by 0.5%, and the war in the Middle East has resumed with renewed intensity.

General Conclusions:

On the last trading day of the week, both currency pairs may start to correct after two days of decline. The euro can be traded from the area of 1.1455-1.1474, while the British pound can be traded from the area of 1.3175-1.3180. Geopolitics, judging by recent market movements, has taken a back seat, and the market is unjustly buying the U.S. dollar, which could be a trap set by market makers for the 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.