Once again, the dollar will be in the spotlight this week, not only because of the Federal Reserve meeting but also due to political developments in the United States. The first thing to pay attention to when the market opens on Monday is the possibility of a sharp price move up or down. Logically, after Friday's market close, Iran launched a retaliatory strike against Israel, and Donald Trump promised serious consequences if Tehran dared to attack US military bases. Why am I not confident in the dollar's strength? Because an upward trend segment is still forming, and on Friday, demand for the US currency increased only marginally—despite the element of surprise at play.

Among other important events are a possible tariff hike from Trump and the upcoming Federal Reserve meeting. The Fed meeting is unlikely to provide markets with much new insight, although surprises are always possible. Jerome Powell and his colleagues have not yet received any information warranting urgent intervention. Recall that the most recent GDP report showed the first contraction in the US economy in three years, but that data was already available during the previous FOMC policy meeting. The inflation report for May showed only a slight uptick compared to the last month, so I don't believe the Fed will make any hasty decisions.

However, Powell may provide the market with guidance on what to expect in the second half of 2025. Specifically, he may indicate at what level of economic slowdown the next round of monetary easing could be expected. He may also share his thoughts on inflation and its possible acceleration. Still, I believe Powell will wait for more clarity from Trump, who has yet to finalize tariff decisions and seems ready to use them as leverage. Thus, tariffs could change multiple times before the president reaches a conclusion. Let's not forget that trade negotiations are still ongoing. A month from now, the tariff situation could look completely different.

Wave Analysis for EUR/USD:

Based on my EUR/USD analysis, I conclude that the pair continues building a bullish trend segment. The wave count depends entirely on the news flow related to Trump's decisions and U.S. foreign policy. The targets for wave 3 could extend as far as the 1.25 area. Accordingly, I am considering long positions with targets around 1.1708, corresponding to the 127.2% Fibonacci level and higher. A de-escalation in the trade war could reverse the bullish trend downward, but currently, there are no signs of reversal or de-escalation.

Wave Analysis for GBP/USD:

The wave pattern for GBP/USD remains unchanged. We are dealing with a bullish, impulsive trend segment. Under Trump, the markets could face many more shocks and reversals that do not align with any wave structure or technical analysis. However, the working scenario remains valid for now, and Trump continues to take actions that only reduce demand for the U.S. dollar. The targets for wave 3 are around the 1.3708 mark, corresponding to the 200.0% Fibonacci extension of the presumed global wave 2. Therefore, I continue to consider long positions, as the market has shown no willingness to reverse the trend yet.

Key Principles of My Analysis:

1. Wave structures should be simple and understandable. Complex structures are hard to trade and often lead to changes.
2. If there's no confidence in the market situation, it's better to stay out.
3. Absolute certainty in price direction doesn't exist and never will. Don't forget your Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.