13.04.202600:57 Forex Analysis & Reviews: American Dollar. Weekly Preview

In the previous two previews, we examined the events in the Middle East that are expected in the near future. Now, let's analyze how these events may influence the movements of the EUR/USD and GBP/USD instruments. Strictly speaking, if both instruments fall on Monday, it won't look strange. The negotiations have failed, and a new escalation of the conflict is possible in the near future. Negotiations may continue, but it is already clear that Tehran and Washington will not be able to agree on the most important issues. They were unable to do this in February and could not do it last year. Therefore, there is only one option left - to fight and resist.

Does the wave structure allow for a decline in the EUR/USD and GBP/USD instruments? It not only allows it but encourages it. I would like to remind you that we observed the formation of impulsive downward segments of the trend, followed by standard three-wave corrections. Both corrective structures can already be considered complete, both by wave counts and by the size of the corrections themselves. Consequently, the construction of new downward segments may begin as early as Monday.

Regarding economic events, I would highlight only the speeches by Christine Lagarde and Andrew Bailey. For the market to react to the speeches of the European Central Bank and Bank of England presidents, their comments must be unexpected. Under current circumstances, Lagarde and Bailey can only hint at tightening monetary policy at the next meeting. This week, there were doubts about the rate increase scheduled for April, but after the failure of the negotiations in Islamabad, confidence has increased significantly. Therefore, I believe that demand for the US dollar will rise again.

Wave Picture for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument remains within the upward segment of the trend (lower image), while in the short term, it is within a corrective structure. The corrective wave set appears quite complete and may take on a more complex, extended form only if a sustainable ceasefire is established between Iran, the U.S., Israel, and ALL other countries in the Middle East. Otherwise, I believe that a new downward wave set may begin to form from the current positions.

Wave Picture for GBP/USD:

The wave pattern for the GBP/USD instrument has become clearer over time, as I had anticipated. We now see a clear five-wave downward structure on the charts with an extension in the third wave. If this is indeed the case, and geopolitics does not provoke a new crash of the instrument in the near future, we can expect the formation of at least a three-wave corrective structure, within which the pound could rise to levels of 1.3511 and 1.3594, corresponding to 50.0% and 61.8% on the Fibonacci scale. If a ceasefire is reached, the corrective segment of the trend could turn impulsive.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often involve changes.
2. If there is no confidence in market developments, it is better not to enter the market.
3. There is never 100% certainty in the direction of movement. Always remember to use protective stop-loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.