This week is relatively poor in terms of economic reports. However, on Friday, Jerome Powell will deliver his speech in Jackson Hole, and as early as Tuesday morning, the terms of a ceasefire between Ukraine and Russia may become known. I do not think the next few days will be boring. They may lack economic events, but currency market prices are influenced by more than just economics.

In recent weeks, debates have been raging in the market, resembling the "chicken or egg" dilemma. The fact is that the U.S. central bank, due to Donald Trump's policies, has found itself in a very difficult and uncomfortable situation. Recall that under U.S. law, the Fed is an independent institution that does not pursue "national goals" determined by current political priorities. It is an institution designed to ensure price stability, support the economy, and maintain a strong labor market. Its mandates are many, but some are more important than others.

In recent years, Powell's agency, in its fight against high inflation, raised the interest rate to levels not seen in decades. The fight against inflation has been largely successful, but not fully. The Consumer Price Index was reduced below 3%, but the stable 2% target has not yet been achieved. This goal would likely have been met in 2025 if Trump had not taken the U.S. presidency. Trump has no interest in inflation, the dollar exchange rate, or price stability. His priorities as president of the world's largest economy, burdened with enormous debt, are entirely different. And the pursuit of these goals, to put it mildly, does not align with Fed policy.

I will not dwell on the conflicts between Powell and Trump, as much has already been written about them. The conflict, however, persists, and Powell will in any case leave his post in nine months. The question is how he intends to spend his final months at the helm of the Fed. Will he ultimately yield to President Trump, or will he continue to hold his line? Recall that Powell does not decide on the rate alone, but he does influence the entire FOMC. Previously, Powell was torn between maintaining his ideological stance and Trump's demands to lower rates. Now, however, Powell faces his own choice, since the labor market itself is calling for easier financing conditions.

Wave pattern for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument continues to build an upward section of the trend. The wave pattern still depends entirely on the news background related to Trump's decisions and U.S. foreign policy. The targets of the upward trend may extend as far as the 1.25 level. Accordingly, I continue to consider long positions with targets around 1.1875, which corresponds to the 161.8% Fibonacci level, and above. I assume that wave 4 has been completed. Therefore, now is a good time for buying.

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 face many more shocks and reversals that could seriously affect the wave pattern, but at present, the working scenario remains intact. The targets of the upward section of the trend are now located around 1.4017. At this point, I assume that the downward wave 4 has been completed. Therefore, I recommend buying with a target of 1.4017.

Main principles of my analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often change.
2. If you are not confident about what is happening in the market, it is better not to enter it.
3. Absolute certainty about the direction of movement never exists and never will. Do not forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.