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20.05.2025 06:02 AM
What to Pay Attention to on May 20? A Breakdown of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

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There are no macroeconomic events scheduled for Tuesday, so the macroeconomic background will have no influence on price movements today. However, reports and data releases have rarely impacted currency pairs in recent months. In most cases, the market ignores any figures in favor of the dollar and gladly reacts to data that are negative for the greenback. From a technical standpoint, the euro remains in a downward correction against the three-month trend, while the pound continues to move sideways.

Analysis of Fundamental Events:

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Among Tuesday's fundamental events, we can note speeches from several Federal Reserve representatives: Barkin, Bostic, Collins, Musalem, Kugler, Daly, and Hammack. Donnery, Cipollone, and Buch are expected to speak from the European Central Bank. Bank of England Chief Economist Huw Pill is on the calendar. However, what significance can these speeches have if the stance and direction of central banks are already completely clear?

We believe that the only factor that matters for the market is the trade war, which, although gradually de-escalating, persists. Donald Trump continues to announce the signing of trade agreements, but this information has only a modest impact on the dollar. A renewed dollar decline could occur if Trump starts introducing new tariffs, raises existing ones, or if trade deals with most countries fail to materialize. The dollar may even resume falling without any new tariffs, as market sentiment toward the U.S. president and his policies remains extremely negative.

Conclusions:

Both currency pairs can move in either direction during the second trading day of the new week. There will be no macroeconomic background, and it is impossible to predict when Trump might deliver new high-impact remarks. We anticipate that today will experience low volatility and minimal movement. The British pound may lean toward a decline within its sideways range, while the euro may continue its correction within the one-month downtrend.

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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