New Conflict Between Trump and China — Part 2

[Redator]

To understand the essence of this renewed conflict, it is essential to note that China leads globally in the production of various rare-earth metals and materials, which are widely used in the automotive, aerospace, and technology industries. Previously, China conducted an antitrust investigation against Qualcomm, a U.S. technology firm, and also expressed intentions to impose port fees on American vessels.

China, which was previously forced to return to the negotiating table with Trump in an attempt to restore trade blocked by triple-digit tariffs introduced by both sides, continues to push back, refusing to become a second European Union or Japan. It is worth recalling that both of those regions signed trade deals with Trump that were, in reality, highly unfavorable to them. Under those deals, Tokyo and Brussels committed to investing hundreds of billions of dollars into the U.S. economy, without gaining any substantial benefit in return. As we can see, Beijing does not consider it acceptable to blindly follow instructions from the White House.

Donald Trump immediately posted on Truth Social, stating that "strange things are happening in China," and that "China is becoming hostile." The statement is ironic, considering that it is Trump himself who has started two trade wars with China. However, wars initiated by Trump are framed as justified, designed to eliminate the unfair treatment of the U.S. by other countries. But if another country imposes restrictions, sanctions, or tariffs, they are automatically considered hostile.

It also must be mentioned that a military conflict initiated by Trump—the so-called "peacemaker"—with Venezuela may erupt in the near future. The man who this very week claimed candidacy for a Nobel Peace Prize, and who claimed to have ended seven or eight wars, has now sent U.S. warships to the shores of Venezuela. But of course, that's considered "entirely different."

Economists point out that Beijing seeks equal relations with the U.S. and thus aims for reciprocal responses—an eye for an eye, a tooth for a tooth. It's simply that the trump cards held by Trump and Xi Jinping differ. Each plays the hand they are dealt, and China holds dominance in rare-earth materials. Why wouldn't they play that card if Trump is playing his?

Wave Structure for EUR/USD:

According to the analysis of EUR/USD, the instrument continues to form an upward segment of the trend. The wave structure still entirely depends on the news background, particularly the decisions made by Trump, as well as the domestic and foreign policy of the new White House administration. The targets of the current segment of the trend could reach the 1.2500 range. At present, a complex corrective wave 4 is forming and approaching completion. The bullish wave structure remains intact. Therefore, in the near term, I continue to consider only long positions. By year-end, I expect the euro to rise to the level of 1.2245, which corresponds to the 200.0% Fibonacci level.

Wave Structure for GBP/USD:

The wave structure of GBP/USD has changed. We are still dealing with an upward, impulsive segment of the trend, but its internal wave formation is becoming more complex. Wave 4 is taking the form of a complicated three-wave correction, and its length is significantly greater than that of wave 2. As we are currently observing the formation of a presumed wave within another corrective three-wave pattern, it may soon be completed. If this is confirmed, the upward movement of the instrument within the global wave framework could resume, with initial targets around the 1.3800 and 1.4000 levels..

Core Principles of My Analysis:

1.Wave structures should be simple and easy to understand. Complex structures are difficult to trade and are prone to change.

2.If there is no confidence in the market situation, it is better not to enter the market.

3.One can never have complete certainty about market direction. Always use protective Stop Loss orders.

4.Wave analysis can be combined with other types of analysis and trading strategies.

The material has been provided by InstaForex Company - www.instaforex.com