Review of macroeconomic releases:

Only a few macroeconomic releases are scheduled for Thursday. Some are noteworthy, but over the past month—or longer—the FX market hasn't moved on macroeconomic data. We would not be surprised if today's moves are also impulsive and technical. Yesterday, the euro and the pound showed a decent recovery that may reflect traders covering short positions accumulated over the past month. If that is the case, the euro and pound could continue to recover. Nevertheless, the UK will publish GDP and industrial-production data today, the Eurozone will release industrial production, and the US will report the Producer Price Index and retail sales.

Review of fundamental events:

Among Thursday's events is a speech by Federal Reserve official Beth Hammack, who recently called for faster, more aggressive tightening. However, in our view, the dollar has already priced in future Fed hikes, any hawkish rhetoric from officials, and practically every bullish factor imaginable. Therefore, Hammack's speech is unlikely to trigger a new leg up in the US currency. Only a renewed market desire to buy dollars can spark another dollar rally.

The geopolitical backdrop remains unsatisfactory. The US and Iran are not conducting official talks at this time, although Donald Trump continues to insist a deal could be signed after the US Congressional elections. Trump also repeatedly claims the conflict between Ukraine and Russia could end very soon — a claim he has been making for almost two years. As a result, the market has little faith in such rosy outcomes. Over the weekend, Trump again shifted rhetoric toward Iran and said he might resume military pressure after the Congressional elections. He also announced an energy truce between Kyiv and Moscow that neither side had heard of.

General conclusions:

On the fourth trading day of the week, currency pairs may continue to correct, as bears may finally be satiated. The euro can be traded today from the 1.1198–1.1218 area, and the pound sterling from the 1.3259–1.3267 area.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (rebound or breakout). The less time taken, the stronger the signal.
2. If two or more trades were opened at a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a range (flat), any pair can generate many false signals or may not produce any at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be acted upon only when volatility is high, and a trend line or trend channel confirms the trend.
5. If two levels are too close together (within 5-20 pips), treat them as a support or resistance area.
6. After moving 15 pips in the right direction, a stop-loss should be set to break even.

What to Look for on the Charts:

Price levels (areas) of support and resistance serve as targets for opening buy or sell trades or as sources of signals.

Red lines indicate channels or trend lines that show the current trend and the preferred trading direction.

The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary indicator that can also provide signals.

Important speeches and reports (listed in the news calendar) can significantly influence currency pair movements. Therefore, during their release, traders should approach trading with utmost caution, or exit the market to avoid sudden reversals against the preceding move.

Beginner forex traders 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.