Forex Analysis & Reviews: 02.06.2023 - What events may affect...

02.06.2023 07:13 AM

What events may affect market sentiment on June 2? Analysis of fundamental data for novice traders.

Analysis of macroeconomic reports:

On Friday, there will be a few macroeconomic reports, but all of them will be very important. Neither the European Union nor the United Kingdom will issue data today. All the information will come from the US. There will be three reports, two of which are of the highest significance. Nonfarm Payrolls show the number of jobs created in a month outside the agricultural sector. This is a key labor market indicator. It is expected that 180-190 thousand jobs were created in May. Any number lower than this will be considered negative.

The unemployment rate is the second key labor market indicator. It is expected that by the end of May, the rate will increase to 3.5%. However, even 3.6% should not shock traders as it is still a very low value, close to the lowest one recorded 50 years ago. The average hourly earnings is the last report that will be issued today. This indicator has a direct impact on the inflation rate. The annual increase in wages should not exceed the previous month's value. However, this data is less significant than the first two reports.

Analysis of fundamental events:

There are no fundamental events planned for Friday. In recent days, both pairs have been showing a persistent desire to grow, which is not always justified by specific factors. If the growth in the euro makes sense, the pound's appreciation is raising many questions. However, the short-term trend has changed to ascending for both pairs. Thus, further growth can be expected unless the reports from the US are much stronger than the forecasts.

General conclusions:

On Friday, there will be two important reports. Both of them will be published at the start of the US trading session. There will be no important events in the first half of the day. Also, yesterday, it was reported that the US House of Representatives approved an increase in the debt ceiling. Thus, there will be no default in the US. Yesterday's fall in the dollar was partially caused by this event. However, it is not logical. The market could have priced in the approval of the increase (since there were no other options, really), and now it could be benefiting from short orders. Nevertheless, we still expect a stronger drop from the euro and the pound.

Basis trading rules:

1) The strength of a signal is judged by the time it took to form the signal (a bounce or overcoming level). The less time it took, the stronger the signal is.

2) If two or more trades were opened around any level based on false signals, then all subsequent signals from this level should be ignored.

3) In a flat market, any pair can form a multitude of false signals or not form them at all. In any case, at the first signs of a flat movement, it is better to stop trading.

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

5) In the 30-minute period, you can trade using signals from the MACD indicator only when there is good volatility and a trend, which is confirmed by a trend line or a trend channel.

6) If two levels are located too close to each other (from 5 to 15 pips), they should be considered as a support or resistance area.

What we see on the chart:

Price levels of support and resistance are levels that act as targets when opening buy or sell orders. Take profit levels can be placed near them.

Red lines are channels or trend lines that show the current trend and indicate in which direction it is preferable to trade now.

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

Important speeches and reports (always included in the macroeconomic calendar) can have a significant influence on the movement of a currency pair. Therefore, during their release, you should trade with maximum caution or exit the market to avoid a sharp price reversal against the previous movement.

Beginners should remember that not every trade can be profitable. A clear strategy and money management are key to success in long-term trading.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.