Jerome Powell acknowledged the existing problems in the economy—and that's a fact. How to interpret those problems is up to each trader. My only advice is to follow the "instructions" of the Federal Reserve itself. In my view, the connection between the Fed and the markets is quite strong. There hasn't been a single meeting in recent years where the market didn't understand what to expect from the US central bank.

According to Powell, current rates are high enough to restrain inflation. If that's really the case, then why is inflation rising? The answer is simple: Donald Trump's tariffs are putting upward pressure on inflation. The situation isn't improving over time. If inflation is rising even with high rates, what should we expect when rates are lower? That's why I believe the Fed will not pursue overly aggressive monetary easing. The scenario with three rounds of rate cuts by the end of this year and into early next year seems "super-dovish" to me.

Powell also stated that the central bank cannot afford to cut rates too frequently or too quickly, as that would send inflation out of control. At the same time, waiting too long could seriously hurt the labor market. There is no clear-cut road map for the Fed's next moves—nor could there be.

Given all this, I'd like to separate the wheat from the chaff. Powell said a lot, and that "a lot" can easily confuse traders. One should stick to the base scenario: another single rate cut before the end of the year. The markets were, or still are, hoping for more aggressive easing, but that's nothing new. Demand for the US dollar has risen in recent days due to market disappointment with Powell's speech, but there is no fundamental basis for sustained, strong dollar growth. Because of the current decline, the wave counts for both instruments could be altered—and of course, it would be best to avoid this. Still, we must work with what the market provides. The wave structure for the euro currently looks more convincing. If wave 4 of 5 turns into a three-wave correction, then further upward movement will resume. If the euro resumes its upward trend, the pound is likely to follow suit.

Wave Pattern for EUR/USD:

Based on my analysis, EUR/USD is still in the process of constructing an upward trend segment. The wave structure continues to depend entirely on the news background—particularly decisions by Trump and the internal and external policies of the new White House Administration. The targets for the current trend could reach as high as the 1.25 area. With the news flow unchanged, I continue to stay long, even after reaching my first target near 1.1875, which is equivalent to a 161.8% Fibonacci level. By year-end, I expect the euro to rise to 1.2245, which matches the 200.0% Fibonacci level.

Wave Pattern for GBP/USD:

The GBP/USD wave pattern remains intact. We're dealing with an upward, impulsive part of the trend. With Trump at the helm, markets could face plenty more shocks and reversals, potentially affecting the wave picture—but for now, the main scenario remains whole, as Trump's policies have not changed. The upward wave targets are around the 261.8% Fibonacci level. Currently, I expect the pair to continue rising within wave 3 of 5, targeting 1.4017.

Main Principles of My Analysis:

1. Wave structures should be simple and clear. Complicated structures are hard to trade and often signal changes.
2. If you aren't confident about the market, it's better to stay out.
3. There can never be 100% confidence in the market's direction. Always remember to use stop-loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.