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05.03.202600:56 Forex Analysis & Reviews: The European Union Is Ready to Abandon the Trade Deal with Trump

Relevance up to 14:00 UTC--5

Exchange Rates 05.03.2026 analysis

As soon as the Supreme Court ruled that all trade tariffs imposed by Donald Trump against individual countries and even entire alliances were illegal, the US president immediately reinstated the tariffs under a different guise. Previously, Trump imposed tariffs individually against each country, and didn't ask how the tariff rates were calculated—it's a well-kept secret. Now, the tariff limit is set at 15%, with a duration of no more than 150 days. Personally, I have no doubt that after 150 days, Trump will reinstate all the tariffs again, but this time under a different law or decree. In any case, tariffs will remain the White House's main weapon. However, the new tariffs have created a significant imbalance in the trade agreements from last year.

Recall that last year, Trump somehow managed to conclude trade deals with the EU, the UK, China, South Korea, and several other countries. Economists believe that all deals, except for the US-China agreement, are absolutely onerous for Trump's opponents. However, it is not our business to comment on the conditions the European Union agreed to. The fact is that, according to last year's agreements, the tariffs were one thing, and now they are completely different. Economists immediately calculated that under last year's trade agreement (which has not yet been ratified by the European Parliament), the average tariff on European imports into the US is around 9%. According to Trump's new tariffs, it rises to 13%, and the US president has already advised all countries to adopt the new tariff structure.

Exchange Rates 05.03.2026 analysis

The European Parliament promptly refused to continue the ratification process of the trade agreement. Weeks have passed, and the tariff situation remains unchanged. The boiling point has reached its peak. I previously mentioned that a satisfied and peaceful European Union simply does not want to quarrel with the contentious Trump. It is easier for Brussels to agree to onerous deal terms that the White House is satisfied with than to engage in a full-fledged trade war, not just on paper, but in reality. At that time, I stated that the European Union effectively gave Trump official permission to manipulate the situation. Now, in 2026, we are witnessing exactly this from the American leader. If the EU agreed to average tariffs of about 10% plus commitments to invest hundreds of billions of dollars in the US economy and purchase energy resources worth hundreds of billions of dollars from the US, it means they will also agree to somewhat higher tariffs.

Wave Structure for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument continues to form a bullish trend. Donald Trump's policies and the Fed's monetary policy remain significant factors in the long-term decline of the American currency. The targets for the current segment of the trend could reach the 25 figure. At this point, I believe the instrument remains within the global wave 5, so I expect prices to rise in the first half of 2026. The corrective structure a-b-c-d-e can finish at any moment, as it has already taken a convincing form. I believe it is now prudent to search for areas and levels for new purchases with targets located around 1.2195 and 1.2367, corresponding to 161.8% and 200.0% Fibonacci.

Exchange Rates 05.03.2026 analysis

Wave Structure for GBP/USD:

The wave structure of the GBP/USD instrument appears quite clear. The five-wave upward structure has completed its formation, but the global wave 5 may take a much more extended form. I believe that the construction of a corrective wave set may be completed soon, after which the upward trend will resume. Therefore, I currently advise seeking opportunities for new purchases with targets above the 39 figure. In my view, under Trump, the British pound has every chance of rising to $1.45-$1.50, but recent events in the Middle East are presently complicating the corrective structure.

Key Principles of My Analysis:

  1. Wave structures should be simple and clear. Complex structures are difficult to trade and are often subject to change.
  2. If there is no confidence in the market, it is better not to enter it.
  3. There is never and can never be 100% certainty in the direction of movement. Always remember to use protective stop-loss orders.
  4. Wave analysis can be combined with other types of analysis and trading strategies.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Chin Zhao,
Analytical expert of InstaSpot
© 2007-2026
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