Analysis of Macroeconomic Reports:

Many macroeconomic publications are scheduled for Friday. In Germany, the Eurozone, the UK, and the US, business activity indices for August will be released. Let us remind you that S&P's business activity indices are published in two estimates, unlike the ISM indices. Therefore, the ISM indices carry much more weight. Consequently, the American indices are unlikely to capture traders' interest today, while the European and British ones may attract attention. Additionally, a retail sales report will be released in the UK. All scheduled publications in the morning may only be acted upon if the actual values deviate from the forecasts.

Analysis of Fundamental Events:

There is absolutely nothing noteworthy among Friday's fundamental events. Representatives of the Federal Reserve's Monetary Committee remain silent, as required by Kevin Warsh's new communication strategy with the public, so there is no "fresh" information from the Fed. This week, European Central Bank President Christine Lagarde delivered a speech, but she did not communicate anything significant to the markets. Nonetheless, the ECB may conduct a second monetary tightening this autumn, as can the Bank of England, which once again faces rising inflation. We still have serious doubts about the Fed.

The geopolitical backdrop still leaves much to be desired. The US and Iran are not engaged in any negotiations at this time; the Strait of Hormuz remains closed or partially closed, and Yemeni Houthis maintain the blockade of Saudi Arabia. Tehran has put forward a list of demands to Washington necessary for the opening of the Strait, which Donald Trump will not agree to under any circumstances. Iran has also warned Washington that if the blockade of the Strait is not lifted, it will begin "cleansing" the Strait with its own forces. Meanwhile, Trump has decided to conduct an unprecedented economic operation to eliminate Iran and threatens to impose sanctions on all countries that interact with Iran in any way.

Overall Conclusions:

During the last trading day of the week, currency pairs may trade rather sluggishly as there will be few important news releases today. The euro can be traded in the area of 1.1655-1.1665, while the British pound can be traded in the area of 1.3631-1.3641 and at 1.3695. Overall, we expect both the euro and the pound to strengthen against the US dollar, and only geopolitical factors or a technical need to correct may hinder the upward momentum.

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.