What would have been an adequate reaction from the president in response to a weakening labor market? To change the policy that led to the labor market’s decline. After all, market participants clearly understand that the Nonfarm Payrolls have disappointed for the past three months for a reason. However, as I’ve already said, Trump isn’t particularly concerned about ordinary Americans who are facing high inflation, cuts to numerous social and healthcare programs, rising prices for imported goods, and any goods that rely on imported raw materials or components. Therefore, the American president does not intend to rescue the labor market. This conclusion is so obvious that even the word “obvious” doesn’t need to be said.
On Friday, disastrous labor market data was released. That same day, Donald Trump immediately found a scapegoat in Erica McEntarfer. By Monday, Trump had raised tariffs on India, rejected a trade agreement with Switzerland, announced 100% tariffs on semiconductor imports, and introduced a 200% tariff on all pharmaceuticals. So who can still claim that Trump is concerned about the labor market or inflation?
Undoubtedly, Trump’s policies pose a significant problem for Americans—particularly for those who re-elected him president, as it is they who will bear the full cost of these trade tariffs. And, of course, the ones who will suffer aren’t the millionaires and billionaires. I should also point out that the U.S. stock market continues its sharp rise following a rapid recovery. It would seem that storm clouds are gathering around the U.S., yet investment in stocks is surging. However, as I’ve noted before, this growth is driven solely by domestic investment. Foreign investors cannot be lured into the U.S. at this point—no matter what. And not only because of Trump’s policies and new regulations. Investors value stability, clarity, and security. But how can there be stability or security when Trump issues new ultimatums and imposes new tariffs every other day?
If Trump had any sort of “red line” dictated by economic indicators, he would have stopped long ago. If he hasn’t stopped, then it means no such “red line” exists. Therefore, over the next one, two, three, or even four years, we can expect continued tariffs, accusations, and ultimatums. Inflation will rise, trust in the dollar will fall, and the Fed’s interest rate will decline. These are America’s problems. However, based on these issues, we can conclude that demand for the once-stable and attractive dollar will continue to decline.
Wave pattern for EUR/USD:
Based on my analysis of EUR/USD, I conclude that the instrument continues forming a bullish trend segment. The wave pattern still entirely depends on the news background related to Trump’s decisions and U.S. foreign policy. The targets for this trend segment could reach up to the 1.25 area. Therefore, I continue to consider buying with targets near 1.1875, which corresponds to the 161.8% Fibonacci level, and beyond. Presumably, wave 4 has been completed. Hence, now is a good time for buying.
Wave pattern for GBP/USD:
The wave pattern of GBP/USD remains unchanged. We are dealing with a bullish impulse trend segment. Under Trump, markets may face many more shocks and reversals that could significantly impact the wave picture, but at present, the working scenario remains intact. The targets for the bullish trend segment are now located around 1.4017. I currently assume that the formation of corrective wave 4 has been completed. Therefore, I expect the upward wave set to resume and am considering buying with a target of 1.4017.
Core principles of my analysis:
- Wave structures should be simple and clear. Complex structures are hard to trade and often change.
- If you’re not confident in the market situation, it’s better to stay out.
- There is never 100% certainty in price direction. Always remember to use Stop Loss protection orders.
- Wave analysis can be combined with other types of analysis and trading strategies.
