FX.co ★ Fundamental analysis for beginners on June 14, 2023

Analysis of macro reports:

There will be many macroeconomic reports released on Wednesday. Statistics on industrial production for April will be published in the eurozone, which will likely come worse than expected. The United Kingdom will see the release of data on GDP and industrial production. GDP will hardly draw the market's attention because it will be a monthly report. Industrial production could trigger a strong market reaction. In light of many releases coming in the UK, collectively these figures could impact the British pound.

In the United States, the Producer Price Index (PPI) will be released, which many experts consider important in the current circumstances. However, in our view, it is merely a derivative indicator of the underlying inflation. After the publication of US inflation yesterday, the market will hardly pay attention to producer prices today. So, all the data scheduled for today will be of little importance to the market. However, these reports can still influence market sentiment together or individually.

Analysis of fundamental events:

As for fundamental events on Wednesday, we have the FOMC meeting, the interest rate decision, accompanying statements, and the press conference of Jerome Powell. A lot will depend on the decision about interest rates, and they are unlikely to be raised. In such a case, the dollar will feel pressure as it will be the first time that the Fed does not change rates in over a year. It is also essential to pay close attention to Powell's remarks. If he hints at a rate increase in July, the dollar may strengthen. The market reaction could be prolonged, extending into Thursday.

Final thoughts:

A number of interesting events will unfold on Wednesday. Of course, all eyes will be on the outcome of the FOMC meeting. However, judging by yesterday's price changes, we can expect strong trend movements today, and the greenback will hardly strengthen. In this light, it would be wiser to continue trading in line with the current technical picture in lower time frames.

Basic principles of the trading system:

1) The strength of a signal depends on the time period during which the signal is formed (a rebound or a breakout). The shorter this period, the stronger the signal.

2) If two or more trades are opened at some level following false signals, i.e. those signals that do not lead the price to the Take Profit level or the nearest target level, any consequent signals near such a level should be ignored.

3) During a flat market, any currency pair may generate a lot of false signals or no signals at all. In any case, a flat market is not the best condition for trading.

4) Trades are opened in the time period between the beginning of the European session and the middle of the American session when all positions should be closed manually.

5) We pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend, confirmed by a trend line or a trend channel.

6) If two key levels are too close to each other (about 5-15 pips), they make a support or resistance area.

How to interpret charts:

Support and resistance can serve as targets when buying or selling. You can place a Take Profit near them.

Red lines are channels or trend lines that display the current trend and show which direction is better to trade.

MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market.

Important speeches and reports in the economic calendar can greatly influence a currency pair. Therefore, during such events, it is recommended to trade as cautiously as possible or exit the market to avoid a sharp price reversal against the previous movement.

Beginner traders should remember that some trades can be unprofitable. Having a reliable trading strategy and a money management approach is the key to success in long-term trading.