Macroeconomic Reports Analysis:
Several macroeconomic releases are scheduled for Friday. Germany will publish its industrial production report in the morning, while the European Union will release its retail sales report. However, these reports are unlikely to influence market sentiment, as they are considered secondary indicators. The euro has been trading sideways for a month, so a more significant catalyst would be needed to break out of this range. In the United States, the Nonfarm Payrolls report, unemployment rate, wage data, and the University of Michigan Consumer Sentiment Index will be released today. These four reports could trigger high volatility, but the market reaction will depend on how closely the actual figures match forecasts.
Fundamental Events Analysis:
Friday's fundamental events include a series of speeches by Federal Reserve representatives, as well as an address by Huw Pill, the Bank of England's Chief Economist. Overall, following yesterday's Bank of England meeting, there are virtually no questions regarding the outlook for monetary policy. The key interest rate is expected to continue rising, as the entire Monetary Policy Committee unanimously supports further tightening. The same applies to the Federal Reserve. In October, the US central bank paused its rate hikes, but it is widely expected that the key interest rate will be raised for the second time this year following the final policy meeting in December.
The geopolitical situation remains unfavorable. The United States and Iran are not currently holding official negotiations, and following the Democrats' decisive victory in the elections, Donald Trump himself appears uncertain about how to proceed with Iran. The Democrats have announced that they will demand an end to the war in the Middle East, a position with which Trump strongly disagrees. Therefore, it is still too early to expect the military conflict to end, as hostilities could resume at any time.
General Conclusions:
During the final trading session of the week, market volatility could be high due to the release of important US labor market reports. The euro remains within a sideways channel and is likely to stay there through the end of today's session. The British pound continues to follow an upward trend. The euro can be traded around the 1.1198–1.1218 level, while the pound can be traded around the 1.3456–1.3476 level.
Key Rules of the Trading System:
- The strength of a signal is determined by the time required for it to form (a rebound or a break of a level). The less time required, the stronger the signal.
- If two or more trades based on false signals have been opened near a particular level, all subsequent signals from that level should be ignored.
- During sideways trading, any currency pair may generate numerous false signals or none at all. Technical levels may be ignored.
- On the hourly timeframe, it is advisable to trade MACD indicator signals only when volatility is sufficiently high and a trend is confirmed by a trendline or trend channel.
- If two levels are located too close to each other (within 5–20 points), they should be treated as a single support or resistance area.
- Once the price has moved 15 points in the favorable direction, the Stop Loss should be moved to breakeven.
What the Charts Show:
Price support and resistance levels (areas) – levels that serve as targets for opening buy or sell positions or as sources of trading signals.
Red lines – represent channels or trendlines that show the current trend and indicate the preferred trading direction.
The MACD (14, 22, 3) indicator — its histogram and signal line — is an auxiliary indicator that can also be used to generate trading signals.
Important speeches and economic reports (listed in the economic calendar) can have a significant impact on currency pair movements. Therefore, trading should be approached with extreme caution during their release, or positions should be closed to avoid a sharp price reversal against the preceding movement.
Beginner Forex traders should remember that not every trade can be profitable. Developing a clear trading strategy and applying proper money management are essential to achieving long-term trading success.
