Review of Macroeconomic Reports:

There are few macroeconomic publications scheduled for Wednesday, and among them, only one is significant. The UK will release the inflation report for July today, which will always be a single estimate. It is expected that core inflation will rise to 2.9-3.0%, while the overall rate may decrease to 2.5%. In our view, core inflation is more important, so its acceleration will indicate a greater likelihood of the Bank of England tightening monetary policy in the second half of 2026. This could provide support for the British currency. In the Eurozone, the second estimate of July inflation will be published today and is unlikely to interest traders. In the U.S., the macroeconomic calendar is empty.

Review of Fundamental Events:

One key fundamental event on Wednesday is the speech by Christine Lagarde. It's worth noting that the European Central Bank is the only G7 central bank to have begun tightening monetary policy in response to rising inflation amid the geopolitical conflict in the Middle East and the energy crisis. However, the ECB does not plan to stop there and is ready to implement one or two more rate hikes if consumer prices continue to rise. Thus, comments from the ECB President may provide traders with insight into whether another rate increase can be expected in September.

The geopolitical backdrop remains quite troubling. 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 are maintaining a blockade of Saudi Arabia. Iran has presented a list of demands to Washington necessary for reopening the Strait of Hormuz, which Donald Trump will not agree to under any circumstances. On Monday, Iran also warned Washington that if the blockade of the strait is not lifted, it will begin a "clearance" of the strait by its own means. The rhetoric is clearly escalating, and oil prices are rising again.

General Conclusions:

During the third trading day of the week, currency pairs may trade relatively sluggishly, as there will be few important news items today. The euro can be traded today from the area of 1.1584-1.1594, and the pound sterling from the areas of 1.3456-1.3476 and 1.3587-1.3598. Overall, we expect further strengthening of both the euro and the pound against the U.S. dollar, and only the most important reports this week or geopolitical issues can interfere with this.

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.