Government debt has reached unimaginable heights not only in the US, but also in many other developed and wealthy countries. Overall, America has shown the world how to live on credit while continuing to prosper economically. I think everyone knows that in the US, without a credit history, you can't do much. Sometimes, it even borders on absurdity—Americans take out loans to buy things they could easily pay for right away. But! What matters is credit history, so everything is bought on credit.

The American economy functions according to a principle that, for the most part, remains the same. You can keep borrowing, developing your own economy in constant competition with other "world powers." Each power has its advantages. China has cheap labor and nearly two billion people. Russia is rich in natural resources and vast territories. America is strong both economically and technologically. But why, essentially, do countries take on such massive amounts of debt? For development and investment. Why do they do this? To avoid losing out to other countries in the race. If a neighboring country has racked up debt worth 100% of its GDP, then you have to follow suit. Because the borrowed money will be used to address immediate problems and develop the country, investments that will yield returns later. If you only live within your means, development will take much longer.

Economists note that it's not just the US government that pressures the central bank to lower interest rates. The debts of many countries have grown to such astronomical levels that simply servicing them is a significant strain on their budgets. That's why Trump demands a rate cut from Powell and the FOMC, so taking on new debt and servicing existing debt becomes simply cheaper.

Central banks in other countries are also aiming to lower interest rates, but that's not all. Some central banks are slowing the process of shrinking their balance sheets (in other words, they are selling government bonds off more slowly or not selling them at all). One way or another, this points to a new financial reality that may require a new architecture. Government borrowing is becoming less profitable and more expensive. To make loans more affordable, lower interest rates are needed. However, in this case, inflation can spiral out of control. And inflation is not just about rising prices, as many people believe. For the government, it's a loss of electoral support. For central banks, it's a loss of trust.

Wave Pattern for EUR/USD:

Based on my analysis of EUR/USD, I conclude that the instrument continues to build an upward section of the trend. The wave structure still entirely depends on the news background related to Trump's decisions and US foreign policy. The targets of this trend section could extend all the way to the 1.25 area. Therefore, I continue to look at buying with targets near 1.1875, which corresponds to 161.8% on the Fibonacci scale, and above. I believe that Wave 4 has been completed; therefore, it is still a good time to buy.

Wave Pattern for GBP/USD:

The wave pattern for GBP/USD remains unchanged. We are dealing with an upward, impulsive portion of the trend. With Trump, the markets could face many more shocks and reversals that could seriously impact the wave picture, but for now, the base scenario remains intact. The targets for the upward trend section are now located near 1.4017. At this point, I assume that the downward wave 4 has been completed, and that wave 2 in 5 may also be finished. Therefore, I recommend buying with a target of 1.4017.

Main principles of my analysis:

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