Analysis of Macroeconomic Reports:

There are very few macroeconomic reports scheduled for Tuesday. Nevertheless, the only inflation report from the Eurozone may influence the exchange rate of the European currency. However, in the current circumstances, the euro is struggling to expect confident growth. The consumer price index in Europe has been slowing down recently, which creates additional risks for the euro, as the ECB may resume easing its monetary policy. Recent remarks from Lagarde have indicated that the central bank does not plan to lower rates anytime soon, but if inflation continues to fall, the ECB will have no choice. Today, the event calendars in Germany, the Eurozone, and the UK are empty.

Analysis of Fundamental Events:

Among the fundamental events for Tuesday, we can note the speeches of Fed representatives John Williams and Neel Kashkari, but all market attention is currently focused on the Middle East rather than the Fed. In our opinion, the data on the US labor market and inflation in January were at least contradictory. Therefore, one cannot be certain that the Federal Reserve will not resume its easing cycle of monetary policy in the near future. The labor market showed a slight recovery in January, but it performed weakly throughout 2025. Inflation has slowed down in recent months, but the producer price index and the core personal consumption index are rising. Thus, it is likely that the Fed will exercise caution at the next meeting and keep the key rate unchanged once again.

General Conclusions:

On the second trading day of the week, the market may experience any movement, as events in the Middle East can regularly create turmoil. The euro can be traded today in the range of 1.1655-1.1666, while the British pound can be traded in the range of 1.3403-1.3407. We still see no grounds for strong, sustained growth in the American currency, but the war in the Middle East has introduced corrections.

Key Principles of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (bounce or breakout). The less time taken, the stronger the signal.
2. If two or more trades have been opened at a particular level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat market, any pair can form many false signals or none at all. In any case, at the first signs of a flat trend, it is best to stop trading.
4. Trading deals are to be opened during the period between the start of the European session and the mid-American session, after which all trades should be closed manually.
5. On the hourly timeframe, it is preferable to trade based on signals from the MACD indicator only when there is good volatility and a trend confirmed by a trend line or trend channel.
6. If two levels are positioned too close together (5-20 pips apart), they should be considered a support or resistance area.
7. Upon moving 15-20 pips in the correct direction, a Stop Loss should be set to breakeven.

What to Look for on the Charts:

Price levels of support and resistance are levels that serve as targets when opening buys or sells. Take Profit levels can be placed around them.

Red lines represent channels or trend lines that show the current trend and indicate the direction in which it is preferable to trade now.

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

Important speeches and reports (always included in the news calendar) can significantly affect the movement of the currency pair. Therefore, during their release, trading should be done with utmost caution, or traders should exit the market to avoid sharp price reversals against the previous movement.

Beginning traders in the forex market should remember that not every trade can be profitable. Developing a clear strategy and effective money management are the keys to long-term trading success..