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29.12.202500:41 Forex Analysis & Reviews: American Dollar: Preview of the Week

The U.S. dollar will not save EUR/USD or GBP/USD. The U.S. will also be celebrating the New Year; the market will be closed on Thursday, there will be a shortened trading day on Wednesday, and only a few will be willing to open trades on Friday. Among the economic reports, there are the not particularly significant initial and continuing jobless claims report, the somewhat irrelevant Chicago Business Activity Index, and the purely formal FOMC meeting minutes.

Some analysts believe the FOMC minutes, known as the "minutes of the FOMC," are significant to market participants, but I remind you that they are released three weeks after the meeting. In the context of the December FOMC meeting, they hold no value because, right after the meeting, various reports on unemployment, the labor market, and inflation were released, which will determine the Federal Reserve's future decisions on monetary policy. Therefore, even without important economic data, the information about the FOMC meeting loses its relevance almost entirely after three weeks. Given the published data, this protocol has no significance whatsoever. The dollar will not be able to take control of the situation next week as it has done for much of the outgoing year.

Wave Structure of EUR/USD:

Based on the conducted analysis of EUR/USD, I conclude that the instrument continues to build the bullish segment of the 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 of the current trend segment may extend up to the 25th figure. The current upward wave pattern is developing, and we hope we are now witnessing the formation of an impulse wave set that is part of global wave 5. In this case, we should expect growth towards targets around 1.1825 and 1.1926, corresponding to 200.0% and 261.8% on the Fibonacci retracement.

Wave Structure of GBP/USD:

The wave structure of the GBP/USD instrument has changed. The downward corrective structure a-b-c-d-e in C of 4 appears to be complete, as does the entire wave 4. If this is indeed the case, I expect the primary trend segment to resume its development, with initial targets around the 38 and 40 levels.

In the short term, I anticipated the formation of wave 3 or c, with targets around 1.3280 and 1.3360, corresponding to 76.4% and 61.8% of the Fibonacci retracement. These targets have been reached. Wave 3 or c continues its formation, and currently, a fourth attempt to break the 1.3450 mark (equivalent to 61.8% on the Fibonacci retracement) is underway. Movement targets are 1.3550 and 1.3720.

Core Principles of My Analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to trade and often require adjustments.
2. If there is uncertainty about what is happening in the market, it is better not to enter it.
3. There is never 100% 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 forms of analysis and trading strategies.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Chin Zhao,
Analytical expert of InstaSpot
© 2007-2026

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