11.05.202600:53 Analisis Forex & Kajian: US Dollar: Weekly Preview. Inflation Report and Lack of Prospects

The US dollar is once again under pressure from the market, having lost its main support factor for 2026 — geopolitics. Last week, the US currency failed to benefit from generally positive US labor market and unemployment data. To recap, the unemployment rate remained unchanged for April, while the number of new jobs was significantly higher than market expectations. Moreover, the March figure was also revised upward. Therefore, the market had an excellent opportunity to buy US currency, but it turns out the dollar is needed only as a "safe asset" during geopolitical tensions. As tensions in the Middle East continue to ease and the world prepares for a fragile peace, demand for the US dollar has been declining.

Next week, the scenario will remain the same. The more positive geopolitical news that emerges, the lower the dollar will drop. If the market ignores even positive labor reports, it means that only a new war could save the dollar. Certainly, very few around the world believe that it is worth saving the dollar at such a cost. The second chance for the US currency is a correction. The upward wave structures in the EUR/USD and GBP/USD instruments are approaching completion, so we might see three-wave corrective structures next. However, the upward waves are not yet completed, meaning I expect growth in both instruments during the first half of the week.

The key report in the US next week will be April's inflation. However, one must immediately ask: Should we expect any market reaction to this report? Inflation is not considered a more crucial report than Nonfarm Payrolls. If the market ignores the payrolls, it may also disregard the Consumer Price Index. Nobody doubts that inflation will rise again. The question is how much. However, even an acceleration to 3.7% will not change monetary policy. The Federal Reserve has clearly outlined its direction for 2026—unchanging parameters. In the last meeting, no signals regarding potential tightening were given. Kevin Warsh will take over the Fed on May 15, and it is unlikely that the FOMC will vote to raise or lower the interest rate at the first meeting with the new chairman. The next meeting will be critical for understanding how FOMC governors are now positioned.

Wave Picture of EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument remains within the upward segment of the trend (as illustrated in the lower image) and, in the short term, is within a corrective structure. The corrective wave set appears quite complete and may take on a more complex, elongated form. The geopolitical backdrop in the Middle East continues to improve, which is driving buyer optimism. I expect a new upward movement from current levels, targeting around the 19 figure.

Wave Picture of GBP/USD:

The wave picture of the GBP/USD instrument has become clearer over time, as I had predicted. Now we see a clear five-wave upward structure on the charts that may soon be completed. If this is indeed the case, we should expect the formation of a corrective wave set after the completion of wave 5. Wave 5 could be completed around the 1.3699 level, which corresponds to 76.4% on the Fibonacci scale. If geopolitical developments continue toward long-term peace, the upward segment of the trend may take on a more extended form. Thus, the combination of waves and geopolitical factors will determine the British pound's fate in the coming weeks.

Main Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to interpret and are often subject to change.
2. If there is no certainty about what is happening in the market, it is better not to enter it.
3. There can never be 100% certainty about 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.