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America will once again be a major focus in the news. Surprisingly, it won't primarily be due to economic updates or the Federal Reserve meeting, but rather news surrounding Donald Trump, his policies, and especially his tariff strategy. It's important to note that Trump is facing significant opposition. No one is agreeing to his tariffs willingly, and almost all the affected parties are implementing retaliatory tariffs that will likely decrease the volume of American exports.
Markets are bracing for a slowdown in the European, American, and global economies, but they are directing their frustration primarily at the dollar. If this trend continues, no technical analysis will prevent the American currency from experiencing another decline. The European Union is next in line; the tariffs on steel and aluminum have already taken effect, prompting Brussels to respond with tariffs on goods valued at $26 billion. Trump has labeled the EU tariffs as illegal and has vowed to impose additional tariffs. It appears the trade war is just beginning.
Among the scheduled economic events, it's essential to highlight reports on retail trade, industrial production, and the Fed meeting. I emphasize these key events because less significant reports are unlikely to influence market sentiment. Ultimately, the Fed meeting and news from Trump will carry the most weight. Currently, both factors are poised to either completely disrupt the existing market trend or maintain its structure. Therefore, a downward reversal is necessary. Only strong and impactful data can trigger such a shift or break the current trend pattern.
Based on the analysis above, I anticipate some interesting news, events, and surprises in the market. There have already been numerous occurrences over the past two weeks. The market tends to ignore certain events while reacting strongly to others, which is unexpected given the current calm movements that are relatively easy to predict.
In analyzing EUR/USD, I conclude that the instrument continues to develop a downward phase of the trend; however, it may shift upward in the near future. The expected second wave might soon be complete, but a new increase in quotes could alter the entire wave structure. As the current marking is unclear, I cannot recommend selling the instrument, even though the current marks appear highly attractive for sales if the wave structure remains unchanged. Additionally, Donald Trump may influence a further decline in demand for the US dollar, complicating the formation of wave 3.
The wave pattern for the GBP/USD currency pair indicates that the downward trend is still forming, specifically its second wave. We should now look for new opportunities to sell. The minimum targets of the corrective structure near the 1.2600 level have been reached, while the maximum targets near the 1.2800 level have also been surpassed. The current wave structure suggests that the downward trend, which began last fall, is still in progress. However, how the "Trump factor" will further affect market sentiment remains uncertain. The 1.2922 mark appears to be the "last chance" for the dollar, and it is currently under pressure from buyers.
1. Wave structures should be simple and clear. Complex structures can be challenging to interpret and may lead to unexpected changes.
2. If you are uncertain about market conditions, it is advisable to refrain from entering the market.
3. There is no such thing as 100% certainty regarding market direction. Always remember to use protective Stop Loss orders.
4. Wave analysis can be effectively combined with other types of analysis and trading strategies.
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