empty
05.05.2025 12:51 AM
The U.S. Dollar: Weekly Preview

This image is no longer relevant

The hit parade of American news and events will continue. I still believe that the most significant factor in the market is Donald Trump's decisions. It's enough to compare the price movements of both instruments during periods when Trump actively imposed tariffs versus periods when he remained silent to understand just how important this news is for the market. Last week only reinforced this observation, as all the key U.S. reports triggered completely inconsistent reactions. This leads to the conclusion that there was effectively no reaction at all — the market was trading in accordance with Trump's silence. The U.S. dollar slightly improved its position, but not significantly.

In the new week, the U.S. will see the release of the ISM Services PMI and the Federal Reserve meeting. The FOMC, led by Jerome Powell, still awaits tangible economic changes. One such change was seen this week — GDP growth slowed by 0.3% in Q1 on a quarterly basis, a result not expected even by pessimists. However, I believe this won't prompt the Fed to act quickly, as the labor market has shown reasonably strong results, and the unemployment rate in April did not rise. Therefore, the Fed's only "headache" at this stage is economic growth — which is now absent.

This image is no longer relevant

I believe that monetary policy easing will only resume if unemployment begins to rise and Nonfarm Payrolls decline. The faster these two developments occur, the greater the likelihood of rate cuts. But inflation should not be forgotten either. If inflation continues to rise alongside those two trends, the Fed may remain silent. Practically, no one expects a rate cut next week. Therefore, while the overall situation won't worsen for the dollar, that offers little comfort under current conditions.

Wave Structure for EUR/USD:

Based on my analysis of EUR/USD, I conclude that the pair is continuing to build a new bullish wave segment. Soon, the wave count will depend entirely on the stance and actions of the U.S. President. This must always be kept in mind. From a purely wave-based perspective, I had expected a three-wave correction within wave 2. However, wave 2 has already ended in a single-wave form. Wave 3 of the upward trend has begun, and its targets could extend to the 1.25 area. Reaching these levels will depend entirely on Trump. A corrective wave may form at the moment, but growth is expected to resume once it is complete.

This image is no longer relevant

Wave Structure for GBP/USD:

The wave structure of GBP/USD has shifted. We are now dealing with a bullish, impulsive trend segment. Unfortunately, under Donald Trump, markets may experience numerous shocks and reversals that defy wave theory and any other form of technical analysis. The presumed wave 2 has been completed, as the price has moved beyond the peak of wave 1. Therefore, we should expect the formation of bullish wave 3, with short-term targets at 1.3541 and 1.3714. It would be helpful to see a corrective wave 2 within wave 3, but the dollar would need to strengthen. And for that to happen, someone would have to start buying it.

Core Principles of My Analysis:

  1. Wave structures should be simple and clear. Complex structures are difficult to trade and often require revisions.
  2. If you're uncertain about what's happening in the market, it's better not to enter it.
  3. Absolute certainty in market direction does not and cannot exist. Always remember to use protective Stop Loss orders.
  4. Wave analysis can be combined with other types of analysis and trading strategies.
Chin Zhao,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD: Weak Dollar Meets Indecisive Euro

The EUR/USD pair has consolidated above the 1.1200 level, reflecting the overall weakening of the U.S. dollar. The "bearish attack" we witnessed last week ended in failure. EUR/USD sellers were

Irina Manzenko 19:35 2025-05-20 UTC+2

Euro Exhausts Bullish Momentum

Inflation in the eurozone remained unchanged in April compared to March, fully in line with forecasts—2.2% year-over-year for the headline index, and 2.7% year-over-year for the core index. This inflation

Kuvat Raharjo 19:16 2025-05-20 UTC+2

AUD/NZD. Analysis and Forecast

The AUD/NZD pair is declining, drawing seller interest following the Reserve Bank of Australia's (RBA) decision to lower the official cash rate (OCR) by 25 basis points to 3.85%. Although

Irina Yanina 19:09 2025-05-20 UTC+2

USD/CAD. Current Market Situation Amid Mixed Fundamental Background

The pair is under pressure, trading within the familiar range established earlier. At the moment, the fundamental background is mixed. Crude oil prices are struggling to attract significant buyers, especially

Irina Yanina 19:07 2025-05-20 UTC+2

DXY. The U.S. Dollar Continues to Struggle

Today, the U.S. Dollar Index (DXY), which tracks the dollar's performance against a basket of currencies, is trading near its weekly low, continuing to fight for relevance. The lack

Irina Yanina 19:04 2025-05-20 UTC+2

The Dollar Is Back to Its Old Ways

Markets thrive on conspiracy theories more than anything else. Investors continue to believe that Donald Trump wants a weak dollar to boost the competitiveness of American manufacturers. It's no surprise

Marek Petkovich 18:54 2025-05-20 UTC+2

AUD/USD. RBA Delivers Dovish Scenario, but It's Too Early to Rush into Selling

The Reserve Bank of Australia (RBA) followed the most expected scenario at its May meeting, cutting the interest rate by 25 basis points. However, AUD/USD sellers remain vulnerable

Irina Manzenko 11:44 2025-05-20 UTC+2

Financial Markets Still Gripped by Uncertainty (Potential Decline in #USDX and Gold Prices)

Despite the 90-day truce between Beijing and Washington, market conditions remain extremely tense. Investors are uncertain about what will happen after three months—whether Donald Trump will hike tariffs again

Pati Gani 09:42 2025-05-20 UTC+2

The Market Ignores Warning Signs

When a crowd identifies a leader, it relentlessly pushes forward, clearing everything in its way. Retail investors heeded Morgan Stanley's call to "buy the dip" and began snapping up U.S

Marek Petkovich 09:11 2025-05-20 UTC+2

GBP/USD Overview – May 20: The British Pound Keeps Basking in the Sunlight

The GBP/USD currency pair traded higher on Monday, and we can "thank" the Moody's rating agency for that. As noted in the EUR/USD review, the U.S. credit rating was downgraded

Paolo Greco 07:31 2025-05-20 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.