Demand for the US dollar has been growing for the third consecutive week. Initially, it was a slow and sluggish strengthening, but in recent days, it has gained momentum. I cannot say that the news backdrop justifies the current dollar rally. One must remember and understand that all the key factors behind the dollar's decline in 2025 have not only persisted but intensified. In my opinion, the main factors contributing to the decline of the dollar are the global trade war initiated by Donald Trump and his confrontation with the Federal Reserve, particularly with Jerome Powell.

There's little new to say on the first topic. Over the past two weeks, Trump has increased tariffs on more than two dozen countries and announced new duties on copper and pharmaceutical imports from any country in the world. Trade conditions have become even more restrictive, and the trade war continues to escalate in a direction undesirable for both the dollar and the global economy. If the administration had managed to sign even a few trade deals during this period, it might have mitigated the impact of the new tariffs. But that has not happened.

The confrontation with Jerome Powell is a separate story worthy of Hollywood. Trump has been criticizing Powell throughout 2025, publicly insulting him, calling for his resignation, and trying to find a way to fire the Fed chair. Most recently, Trump has openly begun searching for Powell's successor, who is due to leave the post in May 2026. Technically, Trump could announce a new Fed chair tomorrow—but what difference would it make? Let me remind you that Powell will remain in office for another year, and as everyone has realized by now, he is not going to become Trump's "lapdog suddenly." Therefore, the US president will not achieve the interest rate cuts he desires.

Later on, someone like Scott Bessent or a current Fed governor might take over. But what would change? Bessent may vote to cut rates, and two other governors might support that. But they would face opposition from the remaining nine Fed members, who still uphold the Fed's dual mandate and were not appointed by Trump. In my opinion, both the confrontation with the Fed and the trade war are simply undermining confidence in the US government. That's why I expect the dollar's decline to resume. The current wave structure suggests the formation of a corrective wave pattern, which is precisely what we are currently observing.

Wave Structure for EUR/USD:

Based on my analysis of EUR/USD, I conclude that the instrument continues to form a bullish trend leg. The wave count still entirely depends on the news flow, especially developments tied to Trump's decisions and US foreign policy, with no positive shifts so far. The trend targets may extend up to the 1.2500 area. Therefore, I continue to consider long positions with targets around 1.1875 (corresponding to a 161.8% Fibonacci level) and higher. In the near term, a corrective wave set is expected to form, so new euro purchases are likely to follow after this corrective structure is complete.

Wave Structure for GBP/USD:

The wave structure of GBP/USD remains unchanged. We are dealing with a bullish, impulsive trend leg. Under Donald Trump, markets could still face numerous shocks and reversals that may significantly impact the wave structure. However, the current working scenario remains unchanged. The targets of this bullish leg are now around 1.4017, which corresponds to 261.8% Fibonacci from the assumed global wave 2. Currently, a corrective wave set is developing. According to classic theory, it should consist of three waves.

My Key Analytical Principles:

1. Wave structures should be simple and clear. Complex structures are hard to interpret and often prone to change.
2. If you're unsure about what's happening in the market, it's better to stay out.
3. There is never 100% certainty in market direction. Always use protective stop-loss orders.
4. Wave analysis can and should be combined with other forms of analysis and trading strategies.