Finita la comedia. This is the best way to describe the situation for the U.S. currency. For a long time, I wrote that the Federal Reserve had no grounds for even one round of monetary policy easing, but last Friday turned everything upside down. That day brought not only weak July payrolls, but also downward revisions for June and May. Three consecutive months closed with figures that disappointed everyone. The dollar lost more than 100 basis points within minutes, but I warned that the consequences could be much worse.

Before the latest labor market reports, the Fed had no reason to resume an easing cycle. After these reports, however, we can now expect as many as three rounds in 2025. The labor market has shown a weakness unseen since the pandemic, sharply boosting dovish expectations. Yet expectations alone are not enough — without FOMC policymakers' willingness to cut rates, nothing will happen. With Christopher Waller and Michelle Bowman, it was clear even before the last Fed meeting: both voted for a rate cut to please Donald Trump. Waller openly aspires to be "the next Jerome Powell." The two of them thus caused the first split within the FOMC since 1993.

This week, however, several hawks also supported dovish rhetoric. As a result, a September rate cut is almost inevitable. The question is no longer about the September meeting itself, but rather how much the labor market will weaken in the end — and how many rounds of easing will be needed to halt the "cooling" and stimulate the market.

Michelle Bowman is ready to vote for easing at every meeting until the end of the year. She believes rates should be cut as quickly as possible to prevent further deterioration in the labor market and to avoid forcing the central bank into even more "radically dovish" decisions in the future. In her view, Trump's tariffs are unlikely to cause a sharp acceleration in inflation — though it should be remembered that it was Trump who appointed her to her position,

Thus, Bowman's stance is clear: tariffs will not cause inflation to rise, the labor market needs stimulus, and Trump is doing a good job. The dollar is clearly in for tough times.

Wave Pattern for EUR/USD:

Based on the EUR/USD analysis, I conclude that the instrument continues building an upward section of the trend. The wave count still entirely depends on the news backdrop related to Trump's decisions and U.S. foreign policy. The targets for this trend section may extend up to the 1.25 area. Therefore, I continue to consider buying with targets around 1.1875, which corresponds to 161.8% Fibonacci, and higher. I assume that the construction of wave 4 has been completed. Accordingly, now is a good time to buy.

Wave Pattern for GBP/USD:

The wave pattern for GBP/USD remains unchanged. We are dealing with an upward, impulsive section of the trend. Under Trump, markets may still face numerous shocks and reversals that could significantly affect the wave structure, but for now, the working scenario remains intact. The targets for the upward section are now located near 1.4017. At present, I assume that the construction of the downward wave 4 has been completed. Therefore, I expect the upward wave set to continue and consider buying with a target of 1.4017.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often change.
2. If there is no confidence in what is happening in the market, it is better to stay out.
3. One can never have 100% certainty in the market's direction. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.