The European currency is approaching the new week in a "bottom" position. The euro is in a situation where it can very easily and reasonably continue to build a downward section of the trend, which, judging by the wave picture, should take an impulsive, five-wave form. At the same time, if geopolitics improves, no one will be surprised if the EUR/USD instrument begins to build a new upward section of the trend.

Unfortunately or fortunately, everything in the currency market still depends on geopolitics. In recent weeks, the chances of reaching a peaceful agreement have decreased to a minimum, leading the market to increase demand for the safe dollar. Over the weekend, Donald Trump announced the nearness of an agreement with Iran (which we will discuss in more detail), and next week, the demand for the dollar may decline sharply. The currency market has been experiencing such emotional "swings" for three months now.

What interesting events can we note for next week in the European Union? To answer this question briefly, nothing. On Thursday, European Central Bank President Christine Lagarde will give a speech, and on Friday, unemployment and inflation reports will be released in Germany. And that's it. Market participants will likely not find anything interesting in Lagarde's speech. The latest statements by the ECB's governors have shown that they are still ready for a possible tightening of monetary policy, but do not want to rush into it without being sure of the need for such a step. The question of the Strait of Hormuz's opening remains unresolved, as it depends on inflation dynamics in 2026. If, as Trump says, Hormuz is unblocked soon, energy prices will start to decline, and inflation will slow in a few months. In this case, an interest rate hike will not be necessary. However, if Trump has misled the market again and traders see no deal next week, the ECB may well conduct one round of rate hikes. However, Lagarde is unlikely to openly state whether the ECB is ready to raise rates as early as June.

The German economic reporting in the current circumstances holds virtually no value for traders. The market continues to avoid much more important reports and events, so the data from Germany is merely interesting figures. By the way, inflation in Germany in May may slow down to 2.8%...

Wave Picture for EUR/USD:

Based on the conducted analysis of EUR/USD, I conclude that the instrument remains within an upward section of the trend, while in a more short-term perspective, it is in a corrective structure. The corrective wave set a-b-c appears to be complete. Consequently, the construction of wave 3 or C continues, which may be part of wave C. The entire wave C (if the current wave marking is correct) may complete its formation much below the 14 figure. However, such a scenario will require significant geopolitical support. Otherwise, the downward wave set may take the form of a-b-c and be completed around the 1.1578 mark.

Wave Picture for GBP/USD:

The wave picture for the GBP/USD instrument has become clearer over time. We now see a distinct upward structure on the charts, which is complete. Therefore, I expect a downward wave set to form, which may take an impulsive form and align with the impulsive structure of the EUR/USD instrument. Consequently, after a 300-pip decline, a corrective wave can be expected, followed by a new drop towards the 30-31 figures. I had warned in advance about the new decline of the pound, but I expected a correction. However, the harsh reality shows that this may be a full-fledged impulsive structure, considering the strength of its first wave.

Main Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to play out and often involve changes.
2. If there is no certainty about what is happening in the market, it is better not to enter it.
3. There is no 100% certainty in the direction of movement, and there never will be. Don't forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.