Macroeconomic Releases Review:

Relatively few macroeconomic publications are scheduled for Thursday. Essentially, the only notable release is the US Producer Price Index (PPI), which is especially important for markets in the current environment. Recall that the Federal Reserve primarily focuses on headline inflation and the core personal consumption expenditures (PCE) index. The PPI only complements the overall inflation picture after those two indicators. Therefore, we do not expect an outsized reaction to the PPI, but the market will again use any formal excuse to buy the dollar. Thus, a higher-than-expected PPI could trigger another leg of dollar strength during the US session. In the eurozone today, the second estimate of Q3 GDP will be released, which is of relatively low importance.

Fundamental Events Breakdown:

Among Friday's fundamental events are speeches by Fed officials Mary Daly and Michelle Bowman. As we said, the Fed's monetary policy path through the end of the year is as clear as day, so we shouldn't expect anything new from FOMC officials. However, we also noted that the market will seize on any formal pretext to buy the US currency. So a slightly more hawkish tone from FOMC members could spark another dollar rally.

The geopolitical backdrop remains tense but has eased slightly in recent weeks. The US and Iran are not holding official talks at present, and after the Democrats' decisive election victory, Donald Trump himself seems uncertain what to do next regarding Iran. The Democrats have said they will press to end the war in the Middle East — a stance Trump, to put it mildly, does not share. Continuing a war without full Congressional support will be difficult for the US president, and Iran is not opposed to returning to the negotiating track. On the face of it, conditions appear to push toward a settlement, but yesterday Trump said the US does not need a deal with Iran... Some chances of a resolution exist, but the geopolitical situation remains largely uncertain.

Overall Conclusions:

During the final trading day of the week, market volatility may be low. The euro has left the sideways channel and may continue downward. The British pound remains in a downward correction. The euro can be traded today from the 1.1104–1.1114 area or the 1.1011 level, and the pound sterling from the 1.3259–1.3267 area.

Main rules of the trading system:

1. Signal strength is judged by how long the signal took to form (a bounce or a breakout). The less time required, the stronger the signal.
2. If two or more false signals have been generated around a given level, all subsequent signals from that level should be ignored.
3. In a flat (range), any pair can produce many false signals or none at all. Technical levels can be ignored.
4. On the hourly timeframe, ideally trade MACD signals only when volatility is strong, and a trendline or trend channel confirms the trend.
5. If two levels are placed very close to each other (5–20 pips), treat them as a support/resistance area.
6. After a price moves 15 pips in the intended direction, move the Stop Loss to breakeven.

What is shown on the charts:

Price levels (areas) of support and resistance — levels that serve as targets when opening longs or shorts or as sources of signals.

Red lines — channels or trendlines that display the current trend and indicate the preferred trading direction.

MACD indicator (14,22,3) — histogram and signal line — an auxiliary indicator that can also be used as a source of signals.

Important speeches and reports (listed in the news calendar) can strongly affect a currency pair's movement. Therefore, when they are released, one should trade as cautiously as possible or step aside to avoid a sudden price reversal against the prior direction.

Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and money-management rules is the key to long-term success in trading.