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The Federal Reserve concluded its two-day meeting on Wednesday evening, and the outcome revealed that the US central bank decided to keep the interest rate unchanged, indicating a high risk of accelerating inflation and ruling out any possibility of monetary easing in the face of rising inflation. This is certainly important information that will directly affect the dollar's exchange rate in the future, once geopolitical issues fade from the front pages. However, in my opinion, the most critical event was Powell's speech. Not just his statements regarding the decisions made or the American economy's prospects, but his announcement of his willingness to remain on the Board of Governors of the Fed until at least 2028.
Earlier, reports surfaced suggesting that Jerome Powell would leave his post on May 15, but could still remain as one of the governors, since he had previously been confirmed for a 14-year term. On Wednesday, the Fed Chair confirmed this information. Powell stated that he does not intend to leave the central bank after his term as head ends, at least until the Justice Department's investigation is fully complete.
I remind you that Powell is still under criminal investigation for allegedly giving false testimony to Congress about the budget for repairs to Fed buildings. This investigation was initiated by Donald Trump, who believes that Powell personally spent too much of American taxpayers' money on reconstruction. Notably, Trump is more than willing to spend billions of dollars on the war with Iran. However, what is permitted for one is not allowed for others.
Market participants clearly understand that the sole reason for the investigation against Powell is Trump's desire to remove him from the Fed. According to the US president, Powell is the sole culprit for high rates, resulting in the economy growing more slowly than it could. It does not matter that Powell does not make rate decisions alone; the majority of the FOMC committee shares Powell's views on monetary policy.
Thus, the statements made by the FOMC Chair on Wednesday evening are a challenge to Trump, a demonstration meant to convey to the president that he will not be able to impose his control over the central bank and twist the rates to his liking. According to most economists, if Powell remains on the board, his influence over other governors will be greater than that of the newly appointed Fed Chair Kevin Warsh.
Based on the conducted analysis of EUR/USD, I conclude that the instrument remains within an upward segment of the trend (as shown in the lower image), but in the short term has begun constructing a downward segment. Since the five-wave impulsive structure has completed, my readers can expect price increases over the next week or two, with targets around 1.1568 and 1.1666, corresponding to the 23.6% and 38.2% Fibonacci. Further movements of the instrument will primarily depend on events in the Middle East.
The wave pattern for the GBP/USD instrument has become very complex and difficult to read. We now see a seven-wave downward structure on the charts, which it certainly is not. Most likely, there is an extension or complication within one of the waves. However, this does not clarify the wave analysis. If the wave pattern has once been complicated to an unreadable form, it could complicate again several more times. Therefore, I believe we should focus on the wave analysis of the EUR/USD instrument, which appears much clearer. It is also crucial not to overlook the geopolitical factor, which could send both instruments into a new decline at any moment. If this does not occur, the euro and pound may anticipate growth within the framework of a correction.
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