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Discussions about a US recession have persisted for several years. Such conversations are akin to talks about when the US economy will collapse due to its enormous national debt. As we can see, the American economy continues to exist, as does the country itself, despite being led for the second time in a decade by the odious, unconventional, and ambiguous Donald Trump. Many believe that Trump is doing everything to dismantle America or, at the very least, is playing all-in. Victory would mean global dominance, while defeat entails disintegration, depression, and chaos. The President of the United States continually raises the stakes and frequently speaks of restoring past greatness and achieving unprecedented economic growth. However, the number of his admirers decreases each month, and more Americans, as was the case nearly six years ago, are ready to vote for anyone but the politicians associated with Donald Trump. For the upcoming Congressional elections, this means many swing or Republican Americans will be willing to vote for Democrats, not because they support Democrats.
In the fourth quarter, the American economy slowed down to 0.7% on a quarterly basis. I want to point out that in the preliminary assessment, growth was 1.4%, while in the third quarter it was 4.4%. Economists have long noted that, despite some very positive quarters under Trump, no radical changes have occurred in the US, and the economy is growing weaker, on average, than it did under Joe Biden. Moreover, during more than a year of his governance, Trump has not managed to turn the trade deficit into a surplus, cannot handle the budget deficit, and the US national debt is now growing even faster than before. Returning to the economy, the fourth-quarter GDP is just the first signal of a possible recession.
The second signal is the war in Iran, which may drag on for many months at a minimum. Oil and gas prices are rising worldwide, and America is no exception. The US will not face an energy shortage, as it is the world's largest producer of these resources. However, this does not mean that prices for American consumers and businesses will not rise. The increase in fuel prices will raise the cost of goods and services, forcing Americans to save more. Consequently, businesses will not expand but rather contract, which will hit economic growth even harder.
Based on the analysis of EUR/USD, I conclude that the instrument remains within an upward segment of the trend (bottom picture) but has started forming a downward segment in the short term. Since the five-wave impulse structure is complete, in the next week or two, my readers can expect an increase in quotes with targets around the levels 1.1568 and 1.1666, which correspond to 23.6% and 38.2% of the Fibonacci. Further movements of the instrument fully depend on events in the Middle East.
The wave picture for the GBP/USD instrument has become very complex and difficult to read. Now we see a seven-wave downward structure on the charts, which is undoubtedly not that. Most likely, there is elongation or complication within one of the waves. However, this does not make the wave layout clearer. If the wave picture has once been complicated to an unreadable form, it can be complicated several more times. Therefore, I believe it is best to rely on the wave layout of the EUR/USD instrument, which looks much clearer. Also, one should not forget about the geopolitical factor, which can send both instruments into a new decline at any moment. If that does not happen, the euro and the pound can expect an increase within the correction.
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