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31.08.202609:42 Forex Analysis & Reviews: What to Pay Attention to on August 31? Analysis of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

There are few macroeconomic publications scheduled for Monday. To be precise, there is one. In Germany, the inflation report for August will be released today in its first estimate. Let us remind you that inflation is crucial to the outlook for monetary policy, and the European Central Bank is generally ready to conduct a second rate hike if inflation continues to accelerate and diverge from the target level. Thus, if the consumer price index accelerates as a result of August, it could support the European currency. However, strong euro growth should not be expected, as the market will draw conclusions based on overall euro area inflation rather than just German data.

Analysis of Fundamental Events:

There is absolutely nothing to highlight from the fundamental events on Monday. On Friday, there was a speech by the head of the Federal Reserve, Kevin Warsh, during which phrases about high inflation and the necessity to address it were echoed again. However, does this mean that the Fed's key interest rate will be raised in September? In our view, no, but the market concluded that it would. Based on this factor and the technical factor, the dollar may show moderate strengthening this week.

The geopolitical backdrop still leaves much to be desired. The U.S. and Iran are not currently engaged in any negotiations; the Strait of Hormuz remains closed or partially closed, and the Yemeni Houthis maintain a blockade of Saudi Arabia. Donald Trump has decided to conduct an unprecedented economic operation to eliminate Iran and threatens to impose sanctions against all countries that in any way interact with it. However, so far, no one has supported Trump's plan to eliminate Iran, and whether it will be implemented remains unknown. What is known is that the U.S. has conducted its first attacks in a month on missile launchers near the Strait of Hormuz. As we can see, the conflict has not cooled down and has not gone anywhere.

Overall Conclusions:

On the first trading day of the week, currency pairs may be traded rather weakly again. The euro can be traded today from the area of 1.1584-1.1594, and the British pound from the areas of 1.3456-1.3476 and 1.3587-1.3598. Overall, we expect the decline to continue in the coming days, as the technical trends for both currency pairs have shifted to bearish.

Main Rules of the Trading System:

1. The strength of the signal is assessed by the time it took to form the signal (bounce or level breakthrough). The less time required, the stronger the signal.
2. If two or more trades are opened around a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can form a multitude of false signals or none at all. Technical levels may be disregarded.
4. When trading based on MACD signals on the hourly timeframe, it is advisable to do so only when volatility is high and a trend line or channel supports the trend.
5. If two levels are too close to each other (from 5 to 20 pips), they should be regarded as a support or resistance area.
6. After a 15-pip move in the correct direction, a Stop Loss should be set to break even.

What the Charts Show:

Support and resistance price levels (areas) are the targets when opening buy or sell orders or sources of signals.

Red lines denote channels or trend lines that reflect the current trend and indicate in which direction trading is currently favored.

The MACD indicator (14,22,3) – histogram and signal line – is a supporting indicator that can also be used as a source of signals.

Important speeches and reports (as listed in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be approached with utmost caution, or one should exit the market to avoid sharp price reversals against the preceding movement.

Beginners in Forex trading should remember that not every trade can be profitable. Developing a clear strategy and proper money management are essential for long-term trading success.

*تعینات کیا مراد ہے مارکیٹ کے تجزیات یہاں ارسال کیے جاتے ہیں جس کا مقصد آپ کی بیداری بڑھانا ہے، لیکن تجارت کرنے کے لئے ہدایات دینا نہیں.

Paolo Greco,
Analytical expert of InstaSpot
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