Forex Analysis & Reviews: 19.05.2025 - Euro Currency. Weekly...

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19.05.2025 12:35 AM

Euro Currency. Weekly Preview

As has become the norm in recent months, the economic news background exerts very little influence on financial instruments. Donald Trump and his trade policy remain the primary market driver, and this policy extends beyond international trade. Trump continues to make numerous high-profile domestic decisions and issues even more statements that confuse market participants, often prompting them to avoid dealing with the U.S. dollar altogether to minimize risk. Therefore, the economic background, especially from the Eurozone, will carry extremely limited significance throughout the upcoming week.

I want to remind you that the European Central Bank continues to pursue monetary easing, which the Federal Reserve continues to avoid. Yet, this factor has had no real impact on the euro or the dollar. And if that's the case, then economic reports, less influential than central bank meetings, have even less relevance.

Nonetheless, we should at least list the upcoming events. Economic data will start flowing as early as Monday, with the final estimate for April inflation. There's a very low likelihood that the final reading will differ from the preliminary one, so annual inflation will likely be confirmed at 2.2%. This would give the ECB continued leeway to cut interest rates. For reference, several ECB policymakers expressed support for an eighth consecutive rate cut this past week at the June 5 meeting.

Among other events, the May business activity indexes might garner some interest. Business activity indices in the Eurozone haven't shown much positive performance for quite some time, but even weak numbers haven't affected the euro's exchange rate. Under current conditions, these are "interesting figures." Activity in services and manufacturing is expected to rise slightly but remain around the 50.0 mark. I believe these are completely neutral values that won't attract market participants' attention.

Wave Pattern for EUR/USD:

Based on the conducted analysis, EUR/USD continues to build an upward trend segment. In the near term, the wave structure will depend entirely on the stance and actions of the U.S. president—this must be constantly kept in mind. Wave 3 of the upward segment has begun forming, and its targets may stretch up to the 1.25 level. Achieving these targets will depend solely on Trump's policies. At present, wave 2 within wave 3 may be considered complete. Therefore, I continue to consider buying opportunities with targets above 1.1572, which corresponds to the 423.6% Fibonacci level. It's important to remember that a de-escalation in the trade war could reverse the upward trend, but there are no wave-based signs of a reversal at the moment.

Wave Pattern for GBP/USD:

The wave pattern for GBP/USD has shifted. We are now dealing with an impulsive upward segment. Unfortunately, under Donald Trump, the markets may still face many shocks and reversals that defy wave logic and most forms of technical analysis. The upward wave 3 continues to form, with nearby targets at 1.3541 and 1.3714. Therefore, I continue to consider buying opportunities, as the market does not yet desire to reverse the trend again.

Core Principles of My Analysis:

Wave structures should be simple and clear. Complex patterns are hard to trade and often require adjustments.
If you're uncertain about what's happening in the market, it's better not to enter.
Absolute certainty in market direction is never possible. Always use protective Stop Loss orders.
Wave analysis can and should be combined with other analysis and trading strategies.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.