05.04.202407:06 Forex Analysis & Reviews: Key events on April 5: fundamental analysis for beginners

Analysis of macroeconomic reports:

There are several macroeconomic events scheduled for Friday. Germany, the EU, and the UK, are set to release their Construction PMI data. Meanwhile, the EU will also release a retail sales report. Overall, we don't expect these reports to leave a strong impression on market participants. However, in the US, data on NonFarm Payrolls, the unemployment rate, and average wage levels will be released. All three reports have a direct impact on the Federal Reserve and its monetary policy decisions. Therefore, if the data exceeds expectations, the dollar may start an upward movement, which would be the most logical case. At least in the EUR/USD pair, where the downtrend persists.

Analysis of fundamental events:

Two fundamental events are scheduled for Friday. We will highlight the speeches by members of the Fed's monetary committee – Thomas Barkin and Michelle Bowman. Recall that earlier, Fed Chief Jerome Powell and several of his colleagues suggested that they are still not in a rush to lower interest rates, and monetary easing will only start when inflation returns to the 2% target level. Since inflation has remained persistent in recent months, Fed officials continue to show a hawkish stance, and this should boost the dollar.

General conclusion:

Today, there will be few significant macroeconomic and fundamental events. In general, all the most important reports will be published within 1 minute at the beginning of the US session. However, these reports can provoke turmoil in the market, and both currency pairs will largely depend on them. We expect the euro to fall, while we expect the pound to maintain the sideways channel.

Basic rules of a trading system:

1) Signal strength is determined by the time taken for its formation (either a bounce or level breach). A shorter formation time indicates a stronger signal.

2) If two or more trades around a certain level are initiated based on false signals, subsequent signals from that level should be disregarded.

3) In a flat market, any currency pair can produce multiple false signals or none at all. In any case, the flat trend is not the best condition for trading.

4) Trading activities are confined between the onset of the European session and mid-way through the U.S. session, after which all open trades should be manually closed.

5) On the 30-minute timeframe, trades based on MACD signals are only advisable amidst substantial volatility and an established trend, confirmed either by a trendline or trend channel.

6) If two levels lie closely together (ranging from 5 to 15 pips apart), they should be considered as a support or resistance zone.

How to read charts:

Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.

Red lines represent channels or trend lines, depicting the current market trend and indicating the preferable trading direction.

The MACD(14,22,3) indicator, encompassing both the histogram and signal line, acts as an auxiliary tool and can also be used as a signal source.

Significant speeches and reports (always noted in the news calendar) can profoundly influence the price dynamics. Hence, trading during their release calls for heightened caution. It may be reasonable to exit the market to prevent abrupt price reversals against the prevailing trend.

Beginners should always remember that not every trade will yield profit. Establishing a clear strategy coupled with sound money management is the cornerstone of sustained trading success.