When Donald Trump comes to power, you can't help but feel glad you don't live in the United States of America. Of course, that's a joke—but as with any joke, there's a grain of truth. And the European Union is likely regretting now more than ever that Trump is once again the U.S. president. The calm times are over. First, the coronavirus pandemic, then a military conflict in Eastern Europe (in which Europe is indirectly involved), and now a global trade war aimed at enriching America at the EU's expense. Europe remains a wealthy region but has faced significant challenges in recent years.

Trump continues to confuse not only officials in Brussels but market participants across the board. Sometimes, it seems as though White House representatives deliberately make completely contradictory statements, constantly change the rules, negotiation terms, and deal frameworks. Why they do this is unclear. Perhaps to make their opponents nervous and more likely to agree to whatever terms are currently on the table.

Initially, it was about raising tariffs on the EU to 50% starting August 1. Now it's up to 30%, and at the same time, Trump wants a 15–20% markup on all imported goods and services. In addition, 25% tariffs will apply to car imports, and 50% tariffs will be applied to imports of steel, aluminum, and, apparently, copper. The numbers are constantly changing—often in an upward direction. In this manner, Trump is attempting to coerce the European Union into accepting U.S. terms.

EU politicians also note that the terms of the trade agreement are constantly shifting, becoming harsher, while the rhetoric from official White House representatives remains combative rather than constructive. In other words, the White House continues to issue threats and ultimatums instead of seeking compromise or showing any real willingness to negotiate.

It's also worth noting that Europe imports nearly as many goods and services from the U.S. as it exports there. Therefore, the EU has ways to respond to the U.S. and Trump, including reciprocal tariffs and restrictions. The issue is that Europe prefers to avoid a full-scale trade war with the United States. However, as time passes, the chances of reaching an agreement decrease. In my view, the likelihood of a trade deal being signed before August 1 is no more than 10%.

Wave Analysis of EUR/USD:

Based on the EUR/USD analysis, I conclude that the instrument continues to build a bullish trend segment. The wave structure still heavily depends on news related to Trump's decisions and U.S. foreign policy—and so far, no positive developments have emerged. The targets of the trend segment could extend up to the 1.25 area. Therefore, I continue to consider long positions with targets around 1.1875 (161.8% Fibonacci) and higher. The failed attempt to break through 1.1572 (100.0% Fibonacci) suggests that the market is ready for new purchases of the instrument.

Wave Analysis of GBP/USD:

The wave structure of GBP/USD remains unchanged. We are dealing with a bullish, impulsive trend segment. With Trump in office, markets may face numerous additional shocks and reversals that could significantly impact the wave structure. But for now, the working scenario remains intact. The targets of the bullish trend segment are now near 1.4017, which corresponds to 261.8% Fibonacci of the presumed global wave 2. A corrective wave set is currently forming. Typically, this consists of three waves, but the market may settle for just one.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are hard to trade and often involve changes.
2. If you're uncertain about what's happening in the market, it's better to stay out.
3. You can never be 100% sure about market direction. Don't forget to use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.