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19.05.2025 07:34 AM
What to Pay Attention to on May 19? A Breakdown of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

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On Monday, there are very few macroeconomic events scheduled. The only noteworthy release will be the second estimate of the Consumer Price Index (CPI) for April in the Eurozone, which lacks significance for the market for three reasons. First, the market continues to ignore the macroeconomic backdrop broadly. Second, this is the second estimate of the CPI, which is objectively less important than the first. Third, the European Central Bank's monetary policy direction is very clear. CPI matters primarily due to its influence on ECB interest rate decisions. There will be no important reports from the UK or the US.

Analysis of Fundamental Events:

Among fundamental developments, we can note speeches from Federal Reserve officials Bostic, Jefferson, Williams, Logan, and Kashkari. However, what value would these speeches hold if Jerome Powell had already reiterated this week that there is no need to cut rates since inflation may accelerate?

We believe the market still cares only about the trade war and U.S. news that justifies selling the dollar. The escalation of the conflict is on pause, and Trump continues to announce the signing of trade agreements, but this information offers only modest support for the dollar. Dollar weakness may resume if Trump introduces new tariffs, raises existing ones, or fails to finalize trade agreements with most countries. However, the ongoing de-escalation of the conflict should, at the very least, occasionally support the U.S. currency. It's worth acknowledging that overall market sentiment toward the dollar remains extremely negative, making it difficult to expect strong and sustained appreciation. The euro is still managing to grow—albeit slowly—but the pound is stuck in place.

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General Conclusions:

On the first trading day of the new week, the EUR/USD and GBP/USD currency pairs might move in either direction. The macroeconomic background will be weak, and it's impossible to predict when new high-impact comments from Trump will surface. We believe that market activity today will be sluggish and close to flat. Trading is only advisable if strong technical signals emerge.

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.

Paolo Greco,
Analytical expert of InstaForex
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