As mentioned in the two previous reviews, market movements next week will depend on the "four global themes." I previously stated that there might be no news on these themes at all over the next five days. If that turns out to be the case, the market may experience a dull five days with minimal activity and limited price swings. However, it's also important to remember that in 2025, the market has been reacting quite painfully to many overtly "hyped" news items. For example, Donald Trump has already triggered market volatility several times with statements about preparing to fire Powell, seeking a replacement 10 months before Powell's term expires, or suggesting that Powell might resign due to financial misconduct. In each case, these "Trump rumors" had no actual consequences. Powell continues to lead the Federal Reserve and has no intention of resigning early. Nevertheless, market participants responded each time by selling the dollar.
A similar scenario could unfold next week. Trump might come up with new "options" for dismissing or pressuring Powell, and may announce a new name for the Fed chair position. That individual could, in turn, start exerting pressure on Powell and the entire FOMC. Meanwhile, the market will attempt to gauge how this "verbal stream" may impact the Fed's monetary policy over the coming year. As a result, even the most seemingly harmless statement can trigger volatility, since the market is likely to interpret it in its own way.
Jerome Powell is scheduled to speak in the U.S., but the topic of the Fed chair's address is not yet known. Powell may provide further comments on Trump's accusations regarding overspending on the renovation of Federal Reserve buildings. However, in my view, it's already clear to everyone that Trump is simply looking for a pretext to remove Powell from office.
From the economic calendar, we can note the business activity indices and the report on durable goods orders. But economic reports are unlikely to take center stage for the market amid the broader news background.
Wave Structure for EUR/USD:
Based on my analysis of EUR/USD, I conclude that the instrument continues to build an upward segment of the trend. The wave structure still entirely depends on the news flow, particularly decisions from Trump and U.S. foreign policy, and there have been no positive developments yet. The target levels for this trend segment may extend up to the 1.2500 area. Accordingly, I view buying opportunities with targets near the 1.1875 level, which corresponds to the 161.8% Fibonacci level, and potentially higher. A corrective wave set is expected to form in the near term, so new euro purchases should follow once this correction is complete.
Wave Structure for GBP/USD:
The wave structure for GBP/USD remains unchanged. We are dealing with a bullish, impulsive segment of the trend. Under Donald Trump, the markets may face many more shocks and reversals, which could significantly impact the wave pattern, but for now, the working scenario remains intact. The targets for the upward segment of the trend are now near the 1.4017 level, which corresponds to 261.8% Fibonacci of the presumed global wave 2. Currently, a corrective wave set is being formed. Traditionally, this should consist of three waves.
Key Principles of My Analysis:
- Wave structures should be simple and clear. Complex structures are difficult to trade and are often subject to change.
- If you're not confident about market conditions, it's better to stay out.
- There is never 100% certainty in market direction. Don't forget to use protective Stop Loss orders.
- Wave analysis can be combined with other types of analysis and trading strategies.
