New Conflict Between Trump and China

[Redator]

It is quite possible that demand for the U.S. dollar would have continued to grow modestly without any strong justification. But on Friday evening, Donald Trump announced on his social media platform, TruthSocial, the introduction of additional tariffs on all imports from China.

All market participants know that the trade standoff between China and the U.S. began during Donald Trump's first presidential term. It was then that Washington first imposed tariffs on Chinese imports, sparking a year-and-a-half-long negotiation over a trade deal. Trump began his second term with another trade war—this time targeting the entire world—since it's now hard to find a country on the political map that hasn't faced some form of Trump-imposed punishment.

However, many in the market also believed that the goal of Trump's trade war with each country was to secure a trade agreement on terms favorable to him. In simple terms, the scheme was as follows: Trump imposes tariffs, the opposing side gets frightened, negotiations begin, and Trump obtains a trade deal, which, in his view, is better than free trade. The European Union, the United Kingdom, and several other countries followed this path. But I warned that a trade agreement does not guarantee that the U.S. president won't randomly impose more tariffs the next day. In other words, trade deals do not include a clause preventing the introduction of new duties.

Trump's mood this week is not good. The conflict between Ukraine and Russia remains unresolved. An effort to pressure Moscow by imposing tariffs against India and China alongside the EU has failed. The Nobel Peace Prize was awarded to the Venezuelan opposition leader, not Trump. To top it off, "unfriendly" China decided to restrict its export of rare-earth metals, which pushed Trump over the edge.

As a result, Trump's first move on Friday was to announce a 100% tariff increase on all Chinese goods and services. Quite frankly, it's unclear whether negotiations between Beijing and Washington will take place this time—or if Beijing will finally understand that, for Trump, agreements mean nothing. He will continue to play every card he has. The global wildcard remains the same: the vast and wealthy American market, which is highly attractive for cheap Chinese products.

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