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26.05.2025 12:49 AM
U.S. Dollar: Weekly Preview

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The U.S. dollar remains at the center of attention and "at the head of the table." It is the first currency to respond to changes in Donald Trump's foreign and trade policies, prompting other currencies to adjust in response. This is why news from the U.S. tends to have a more significant impact on the markets compared to developments in Europe or the United Kingdom.

Unfortunately, economic news has recently lost much of its relevance. However, the upcoming week will begin not on Monday but Sunday, with a speech by FOMC Chair Jerome Powell. It's not difficult to guess what Powell will say — for months, he has been repeating the same message: Inflation in the U.S. is expected to accelerate due to Trump's tariff policy, and the Federal Reserve cannot afford to cut rates just yet. The Fed prefers to wait until mid-summer to fully assess the impact of tariffs, allowing economic indicators to reflect the true extent of the damage.

Moreover, Trump's tariff policy remains unsettled. On Friday, he announced plans to raise tariffs on EU goods to 50%. It's unclear whether the President was serious or if he might reverse his position as early as Monday — which is entirely possible. The fact remains: tariffs could rise again, and the Fed may need even more time to assess the fallout.

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On Tuesday, we can expect the report on the durable goods orders. On Wednesday, the FOMC Minutes will be published. Thursday will bring the second preliminary estimate of the first quarter GDP. Finally, the core PCE (Personal Consumption Expenditure) price index will be released on Friday. As a result, we will have interesting information from the US almost every day.

I believe that much of this information will go unnoticed by the market, as it will likely be focused on anticipating Trump's upcoming statements about trade tariffs expected at the beginning of the week. Additionally, it will be interesting to see how the European Union responds to the new threats from the US president.

EUR/USD Wave Structure:

Based on my analysis of EUR/USD, the pair continues to develop a bullish wave structure. In the near term, the wave formation will depend entirely on the news background, especially Trump's decisions and U.S. foreign policy. And Trump, as we can see, is intent on continuing the fight. Wave 3 of the upward cycle has begun, with targets potentially extending toward the 1.25 area. Therefore, I continue to consider buying opportunities, with targets above 1.1572, corresponding to the 423.6% Fibonacci extension. It's important to keep in mind that a de-escalation of the trade war could reverse the uptrend, but at the moment, there are no signs of reversal or de-escalation.

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GBP/USD Wave Structure:

The wave structure for GBP/USD has evolved. We are now dealing with a bullish impulse wave. Unfortunately, under Donald Trump, markets may still face many shocks and trend reversals that defy wave theory and technical analysis. However, everything is unfolding in line with the updated wave scenario. The pair is still developing wave 3 of the uptrend, with near-term targets at 1.3541 and 1.3714. Therefore, I continue to focus on long positions, as the market has no desire to reverse the trend again.

Core Principles of My Analysis:

  1. Wave structures should be simple and clear. Complex structures are hard to interpret and often change unpredictably.
  2. If there is no confidence in the market setup, it's better not to enter a position.
  3. Absolute certainty in price direction is impossible. Always use protective Stop Loss orders.
  4. Wave analysis can and should be combined with other types of analysis and trading strategies.
Chin Zhao,
Analytical expert of InstaForex
© 2007-2025
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