Goldman Sachs and JPMorgan Bet on Euro Growth

[Redator]

In my reviews, I have repeatedly stated that I continue to expect growth in the European currency. Many economists also support this view, as most factors point in favor of the euro. The key factor, in their opinion, is further monetary easing by the Federal Reserve, combined with the likely completion of the ECB's easing cycle. Since Donald Trump is demanding that the Fed lower rates to at least 2%, there is reason to expect that the Fed will eventually reach the target that the ECB has already achieved. In other words, over the next six months, a year, or even two, only the Fed will be engaged in rate cuts, putting the already weak dollar in an even more difficult position.

The situation for the dollar shifted at the beginning of 2025, when Donald Trump assumed the U.S. presidency for the second time. I will not list all the measures Trump has implemented so far, but it is clear that investors and markets still worry about the state and outlook of the U.S. economy, labor market, and inflation. "Uncertainty" is the best word to describe the current environment. Even tariffs bring no clarity. Markets had just begun to adjust to the reality of high tariffs for half the world's countries when, in November, the U.S. Supreme Court may overturn them. Few believe in this outcome, but once again, this uncertainty weighs against the dollar.

Goldman Sachs and JPMorgan both believe that the EUR/USD pair will surpass the 1.20 mark before the End of the Year. I personally expect to see 1.22 by year-end. Goldman Sachs forecasts that the euro will reach 1.25 within the next 12 months. JPMorgan is confident in its growth to at least 1.22. A stronger euro will hurt European exporters, as their goods will become more expensive for foreign buyers. This could slow down the European economy, negatively impacting the euro's exchange rate. However, since the Fed will continue cutting rates in parallel, the euro is unlikely to fall too low. This outlook fully aligns with the current wave structure.

EUR/USD Wave Pattern:

Based on my analysis of EUR/USD, I conclude that the instrument continues to build an upward section of the trend. The wave pattern still depends entirely on the news background tied to Trump's decisions, as well as the domestic and foreign policy of the new White House administration. The targets of the current trend section may extend as far as the 1.25 area. At present, the instrument is declining within corrective wave 4, while the overall upward wave structure remains valid. Accordingly, I am considering only long positions in the near term. By year-end, I expect the euro to rise to 1.2245, which corresponds to 200.0% on the Fibonacci scale.

GBP/USD Wave Pattern:

The wave structure of GBP/USD has undergone a change in shape. We are still dealing with an upward impulsive section of the trend, but its internal wave pattern is becoming less readable. If wave 4 assumes a complex three-wave form, the structure will normalize; however, even in this case, wave four will be several times more complicated and extended than wave 2. In my opinion, it is best to work from the 1.3341 level, which corresponds to 127.2% of the Fibonacci. Two failed attempts to break this level may indicate the market's readiness for new buying.

My Core Principles of Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often shift.
2. If there is no confidence in market developments, it is better not to enter.
3. One can never have 100% certainty about market direction. Always use protective Stop Loss orders.
4. Elliott Wave analysis can be combined with other forms of analysis and trading strategies.

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