On Wednesday evening, the Federal Reserve announced the outcome of its fifth meeting of the year. No significant decisions were made, yet the market once again created problems for itself — and tried to solve them as best it could. Let me remind you: at the beginning of the year, market participants expected four rounds of monetary policy easing from the Fed. However, the meeting marked the fifth meeting of the year, and not once has the FOMC voted to cut rates.

The reasons for this are so obvious that it hardly seems necessary to mention them again. Jerome Powell, along with nearly all of his colleagues, has been repeating the same message since the beginning of the year — Donald Trump's tariffs will almost certainly fuel inflation, and therefore the Fed cannot afford to cut interest rates until it is confident that inflation remains under control. Since Trump has still not finalized the list of tariffs or the countries they will apply to, the Fed cannot assess how much inflation will rise or how long it will continue to increase.

As a result, the obvious decision was made last night: to leave the interest rate unchanged, a decision supported by the majority of Fed governors. The fact that two governors (Bowman and Waller) voted for a rate cut should surprise no one — even if this is the first time in 30 years the Monetary Policy Committee has made a non-unanimous decision. Waller is very eager to become the next Fed Chair, and Michelle Bowman may simply be trying to show loyalty to Trump, who appointed her to the position.

All other governors were not appointed by Trump and therefore continue to carry out their duties without paying heed to the U.S. president's calls for rate cuts. Jerome Powell took a completely logical and predictable stance at the press conference: until the scale of tariffs and the resulting inflation growth becomes clear, the Fed will not begin easing monetary policy. The U.S. dollar surged on this statement, as the market had expected a direct announcement of rate cuts in September. Accordingly, the market once again anticipated dovish rhetoric and action — and once again was disappointed. This is not the first time. Since expectations did not align with reality, the market reacted rather strongly.

Wave Structure for EUR/USD:

Based on the conducted EUR/USD analysis, I conclude that the instrument continues forming an upward trend segment. The wave count still entirely depends on news developments related to Trump's decisions and U.S. foreign policy. The targets of this trend segment may extend up to the 1.25 area. Therefore, I continue to consider buying opportunities with targets around the 1.1875 level, which corresponds to the 161.8% Fibonacci extension, and higher. In the coming days, wave 4 may be completed, so it's worth looking out for new buying opportunities this week and closely monitoring the news backdrop.

Wave Structure for GBP/USD:

The wave structure of the GBP/USD instrument remains unchanged. We are dealing with an upward impulsive trend segment. Under Trump, markets may face many more shocks and reversals that could significantly impact the wave structure — but for now, the working scenario remains intact. The targets for the upward trend segment are now located around the 1.4017 level. A corrective wave set within wave 4 is currently forming. According to classic theory, it should consist of three waves, and we are now witnessing the formation of wave c.

Core Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often shift.
2. If you are unsure about the market situation, it's better to stay out.
3. You can never be 100% sure about the market's direction. Don't forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.