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12.12.202500:49 Forex Analysis & Reviews: Summary of the FOMC Meeting

On Wednesday, I conducted a thorough analysis of the upcoming FOMC meeting and predicted that the U.S. central bank would lower interest rates, followed by a prolonged pause. Overall, the Federal Reserve conveyed its plan for further actions. Indeed, Jerome Powell reiterated that there is no action plan at the Fed; everything will depend solely on incoming economic information. However, it is precisely this information (of which there has been critically little in recent months) that led me to believe that a new cycle of easing is coming to an end.

I remind you that the blame for the "cooling" of the U.S. labor market can be placed squarely on Donald Trump and his new immigration and trade policies. Essentially, it was the president's actions that forced the labor market to throw out a lifeline. One could even say that Trump provoked the Fed to lower the interest rate since it was clear even this autumn that inflation was rising, making further easing untenable.

However, the Fed has two mandates: ensuring full employment and price stability. The Fed cannot hit both targets simultaneously, especially now, when the president continues to throw obstacles in its way. Therefore, the FOMC had only one option — to balance between two fires. In practice, this means it is impossible to achieve full employment amid rising unemployment, ensure low unemployment given current trade and immigration policies, and maintain inflation at around 2%. Therefore, the Fed must do everything possible to avoid drifting away from both goals at once.

The Fed started with the labor market, which, as of September, showed results that made one reach for the valium. Powell and company resumed the cycle of monetary policy easing, but then the "shutdown" began (also partly due to Donald Trump), and they had to act blindly thereafter. It was clear that a single round of easing would not be sufficient, as the impact of monetary policy changes does not manifest immediately. Therefore, the Fed conducted two more rounds to ensure that the labor market could stabilize somewhat.

Wave Picture for EUR/USD:

Based on the analysis of EUR/USD, the instrument continues to build an upward section of the trend. In recent months, the market has paused, but Donald Trump's policies and the Fed's remain significant factors in the U.S. dollar's future decline. The targets for the current trend segment could extend to the 25th figure. The last upward segment of the trend is beginning to develop, and I hope we are witnessing the formation of an impulsive wave structure within a larger wave 5. Therefore, growth can be expected up to the 25th figure mentioned above.

Wave Picture for GBP/USD:

The wave structure of the GBP/USD instrument has changed. We continue to deal with an upward, impulsive segment of the trend, but its internal wave structure has become complex. The downward corrective structure a-b-c-d-e in C in 4 appears quite complete. If this is indeed the case, I expect the main trend segment to resume its formation with initial targets around the 38 and 40 figures.

In the short term, I anticipated the development of wave 3 or c, with targets around 1.3280 and 1.3360, corresponding to the 76.4% and 61.8% Fibonacci retracement levels. These targets have been reached. Wave 3 or c may continue its formation, and the current collection of waves is beginning to take on an impulsive appearance. Therefore, a continuation of price increases can be expected.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to interpret and often carry changes.
2. If there is no confidence in what is happening in the market, it is better not to enter.
3. There is no absolute certainty in the direction of movement, and there never can be. Don't forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

*تعینات کیا مراد ہے مارکیٹ کے تجزیات یہاں ارسال کیے جاتے ہیں جس کا مقصد آپ کی بیداری بڑھانا ہے، لیکن تجارت کرنے کے لئے ہدایات دینا نہیں.

Chin Zhao,
Analytical expert of InstaSpot
© 2007-2025

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