Analysis of Macroeconomic Reports:

There are no macroeconomic reports scheduled for Tuesday. Therefore, weak market movements can be expected throughout the day. Of course, Donald Trump may at any moment retake center stage with a new decision on tariffs or another "firing of Jerome Powell." However, such events cannot be predicted in advance. Both currency pairs broke through their descending trendlines yesterday, which may indicate that the euro and the pound are at the very beginning of new upward trends.

Analysis of Fundamental Events:

Among Tuesday's fundamental events, Powell's speech certainly stands out. However, it will be of interest to traders not from the standpoint of monetary policy statements, but instead regarding the accusations of financial misconduct related to the Federal Reserve's reconstruction budget. Powell has previously denied all allegations, but Trump continues to pressure the Fed Chair for understandable reasons.

The trade war remains the top issue, with no signs of resolution in sight. This topic may remain a key driver for the dollar and the broader currency market for some time. Therefore, don't be surprised that we're repeating the same thing day after day. The situation remains complex, as Donald Trump has only managed to conclude three trade deals over more than four months of negotiations—one of which is highly questionable. That's three deals out of a possible 75. In the past two weeks, the U.S. President has decided once again to raise tariffs on countries reluctant to negotiate with Washington, while also increasing import duties on copper, pharmaceuticals, and semiconductors.

The U.S. dollar has corrected significantly over the past three weeks, so we now expect a new phase of upward movement on higher timeframes for both currency pairs.

Conclusions:

During the second trading day of the week, both currency pairs may trade sluggishly, as only one significant event is scheduled to occur. Technical corrections are complete. This doesn't mean that the euro and the pound can't decline today, but it does imply that further upward movement should be expected in the near future.

Key Rules for the Trading System:

1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
3. Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
5. MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
6. Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
7. Stop Loss: Set a Stop Loss to breakeven after the price moves 15–20 pips in the desired direction.

Key Chart Elements:

Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.

Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.

MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.

Important speeches and reports, which are consistently featured in the news calendar, can significantly influence the movement of a currency pair. Therefore, during their release, it is advisable to trade with caution or consider exiting the market to avoid potential sharp price reversals against the prior trend.

Beginners in the Forex market should understand that not every transaction will be profitable. Developing a clear trading strategy and practicing effective money management are crucial for achieving long-term success in trading.