After the release of important labor market, inflation, and unemployment reports in the US last week, the market needed to assess how Federal Reserve officials' sentiment had changed in light of the new data on the state of the US economy. There have been several speeches by FOMC members, and the market has received certain answers to its questions.

Strangely enough, Fed officials continue to insist on a higher inflation rate and are concerned about the indicator's ability to return to 2% in the near future. In my opinion, these concerns are unfounded, and FOMC members could soften their rhetoric a bit. Even disregarding the revision to the Nonfarm Payrolls data for 2025 (which I believe requires additional labor-market stimulus), if we focus solely on inflation, it is now only 0.4% away from the target level. What is the Fed waiting for and why?

It is well known that the impact of interest rates is long-term. The Fed's current monetary policy remains "restrictive," which continues to exert a slowing effect on the consumer price index. However, if the Fed resumes easing policy to achieve 2% inflation, it is likely that this indicator will not respond immediately. In other words, inflation will continue to slow, which is an undesirable scenario for the U.S. central bank, as is inflation above 2%.

Chicago Fed President Austan Goolsbee, nonetheless, pointed out to listeners that inflation remains consistently elevated. He suggested that in 2026, the Fed could conduct several rounds of rate cuts, but only if it is confident the disinflation process will continue. Goolsbee noted that service-sector inflation is still too high to trigger a new round of easing right now. One can only ask Goolsbee what evidence would be necessary to indicate progress towards 2% inflation if even 2.4% does not qualify as such?

In any case, the Chicago Fed president made it clear that he is personally not inclined towards "dovish" decisions in the near future. Partly, demand for US currency has been rising in recent days amid the current rhetoric from Fed officials.

Wave Picture for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument continues to build an upward trend segment. The policies of Donald Trump 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 may extend up to the 25th figure. At the moment, I believe the instrument remains within the global wave 5, so I expect an increase in quotes in the first half of 2026. However, in the near term, the instrument may form another downward wave as part of a correction. I believe it is wise to look for areas and levels for new purchases with targets near the marks of 1.2195 and 1.2367, which correspond to 161.8% and 200.0% on the Fibonacci.

Wave Picture for GBP/USD:

The wave picture for the GBP/USD instrument is quite clear. The five-wave upward structure has completed its formation, but global wave 5 may take on a much more extended form. I believe a corrective wave set may form in the near future, after which the upward trend will resume. Accordingly, in the coming weeks, I would advise looking for opportunities for new purchases. In my opinion, under Donald Trump, the pound has a good chance of rising to $1.45-1.50. Trump himself welcomes the decline of the dollar, and the Fed has the opportunity to lower rates again at the next meeting.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to play and often require changes.
2. If there is no confidence in what is happening in the market, it is better not to enter.
3. There is never 100% certainty in the direction of movement. Don't forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.