Trump's next target at the Fed is identified. Part 2

[Ben Graham]

It is worth recalling that Powell himself, a few days ago, for the first time during his tenure as Federal Reserve chair, gave an interview concerning the White House's persecution. He openly stated that he had come under political pressure from the presidential administration, stemming from his unwillingness to cut rates as the president wants. It should be noted that Donald Trump's aggression toward Jerome Powell is quite explicable, whereas any aggression from Powell toward Trump does not and cannot exist. Powell, as Fed chair, has no interest in receiving assistance from Congress or the White House. Therefore, his unwillingness to pursue aggressive monetary easing cannot be regarded as a personal vendetta against the president.

Based on the foregoing, Trump's next target may be Austan Goolsbee. I would not be surprised if it later emerges that Goolsbee, too, participated in the embezzlement of state funds during the reconstruction of Fed buildings or made mistakes many years ago when filing mortgage documents. The pretext does not matter — any will do. The important thing is to remove an inconvenient official from the FOMC and replace him with someone more loyal.

Since at least three governors have already faced Trump's pressure, what are the chances that there will not be more in 2026? Economists note that if the Fed's independence is lost, a mass capital outflow could begin from the United States. Investors would start to flee a country with a strong economy but utterly uncertain economic prospects. Trump's policy is unpredictable and extremely belligerent. If Trump takes control of the central bank, rates could be changed to any values in short periods of time, leaving many investors unable to react. Investors value stability and predictability.

The US dollar, which has enjoyed inexplicable demand in the FX market in recent weeks, could continue to weaken in the long term because of events related to the Fed. At present, market participants are operating from wave counts and largely ignoring the news flow. Thus, we observe declines in both instruments contrary to logic, common sense, and the news background. Since the pound and euro continue to alternate sets of corrective waves, in the near term, it makes sense to rely on the smallest and simplest wave structures — for example, three-wave patterns.

Wave picture for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument continues building an upward segment of the trend. Donald Trump's policy and the Fed's monetary policy remain significant factors for the long-term decline of the US currency. Targets of the current trend segment may extend to the 25th figure. However, to reach the targets, the market must complete the construction of an extended wave 4. Right now, we only see the market's desire to keep this wave going. Therefore, in the near term, a decline to the 15th figure can be expected.

Wave picture for GBP/USD:

The wave picture for GBP/USD has changed. The downward corrective a-b-c-d-e structure in C of wave 4 appears complete, as does wave 4 as a whole. If this is indeed the case, I expect the main trend segment to resume, with initial targets around the 38 and 40 figures.

In the short term, I expected wave 3 or c to form, with targets around 1.3280 and 1.3360, which correspond to the 76.4% and 61.8% Fibonacci levels. These targets have been reached. Wave 3 or C has presumably completed its formation, so in the near future, a downward wave or a set of waves may form.

Main principles of my analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to trade and often change.
2. If you are not confident about what is happening in the market, it is better not to enter it.
3. There can never be one hundred percent certainty in the direction of movement. Do not forget protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

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