What is known about the Trump-Rutte deal?

Ben Graham · 3 horas atrás

On Thursday, Donald Trump poured cold water on the financial markets once again. Since the beginning of the week, market participants were prepared for anything but an agreement on Greenland and the cancellation of tariffs that had not even taken effect yet. However, the U.S. president once again proved that he knows how to surprise and change his mind.

During his speech at the forum in Davos, Trump stated that an agreement on Greenland has been reached, that this agreement is indefinite, and that it fully satisfies the U.S. and NATO countries. I want to note right away that Trump gives interviews or speaks about five times a day. The morning statements of the U.S. president can differ radically from the evening ones. Thursday was indeed such a day.

Initially, Trump stated that Denmark cannot provide protection for Greenland, that European Union countries again demonstrate their weakness, and that NATO does not do enough to protect the Arctic region. The U.S. leader once again stated that he wishes to buy the island, calling it "a matter of national security for the USA."

However, by the evening, his rhetoric had turned 180 degrees. Trump stated that he held productive negotiations with NATO Secretary General Mark Rutte, who presented him with a framework agreement that satisfies America. What this agreement entails, what was proposed, what the status of Greenland will now be, who will control it, and how the U.S. plans to use the island—all of this remains a mystery shrouded in darkness.

There are also no comments from European leaders online regarding what this agreement is and whether it satisfies the European Union. However, the deal proposed by Rutte, about which absolutely nothing is known, still needs to be approved by Denmark and Brussels. Therefore, negotiations on the new agreement between the EU and the US may be at an early stage and could drag on for many months.

Thus, it is still too early to celebrate the cancellation of tariffs and the resolution of issues with Greenland. Trump announced tariffs on Saturday, canceled them on Thursday, and may reinstate them next Saturday. How the European Union will react to the "deal of the century" is also unknown. The American currency remains under market pressure quite justifiably. The main point is that Trump does not intend to seize the island by military means, which reduces market tension.

According to unverified information, the deal does not involve Denmark losing control over Greenland. It seems that the deal will only allow the U.S. to strengthen its presence on the island and in the Arctic region.

Wave picture for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument continues to form an upward trend. Donald Trump's policy and the Federal Reserve's monetary policy remain significant factors in the long-term decline of the American currency. The targets of the current trend segment may extend to the 25-figure. However, to achieve the targets, the market must clearly and irrevocably complete the formation of the extended wave 4. Currently, I am not confident that the last segment of the trend will take the form of a-b-c-d-e. Therefore, a decline to the 15 figure can still be expected.

Wave picture for GBP/USD:

The wave picture for the GBP/USD instrument has changed. The downward corrective structure a-b-c-d-e in C of 4 appears complete, as does the entire wave 4. If this is indeed the case, I expect the main trend segment to resume its construction, with initial targets around the 38 and 40 levels. 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 is presumed to have completed its formation, so a downward wave or a set of waves may be observed in the near future.

Key principles of my analysis:

Wave structures must be simple and clear.
If there is no confidence in what is happening in the market, it is better not to enter it.
There is never 100% confidence in the direction of movement.
Wave analysis can be combined with other types of analysis and trading strategies.

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