Tuesday's event wasn't exactly a landmark, but it was still important enough. Initially, the market barely reacted, but Wednesday's decline in both instruments suggests that traders ultimately decided to take Powell's remarks into account.

There's a lot to unpack here. Let's try to get to all the "hidden rocks" under the surface. First off, Jerome Powell's rhetoric differed little from what he's been saying week after week, month after month, throughout 2025. Powell still maintains that the FOMC should make decisions strictly based on incoming economic data. If the labor market continues to "cool" or shows only very weak signs of recovery, the Federal Reserve will be prepared to implement one or two more rounds of monetary easing. If, instead, the labor market recovers or inflation accelerates, the rate-cutting process will come to an end.

Let's recall that inflation remains a critically important indicator for the Fed, despite Donald Trump's view that it is "very low" and doesn't deserve attention. However, the CPI has been climbing for four consecutive months, with no sign that the surge is over. Powell himself admits the impact of Trump's tariffs has not yet been fully reflected in US goods and services prices, and if inflation rises above 3%, any further policy easing should be halted.

So what do US dollar purchases mean? Strangely enough, only one thing: the market was (once again) expecting much more "dovish" actions from the Fed and "dovish" rhetoric from Powell. Why? That's a question I've been asking since last year. Obviously, if the Fed's constant stream of speakers actually saw justification for more aggressive rate cuts, they would have started hinting at that already. However, most officials remain silent—and yet the market continues to believe in global monetary easing.

In summary, the market appears to be prone to repeating mistakes, failing to learn from history. Nevertheless, it's essential to understand what happens next. Nothing catastrophic has happened with the euro; it's just that wave four may develop as a three-wave move. The situation is worse for the pound, where the wave structure may undergo some changes.

Wave Pattern for EUR/USD:

Based on my analysis, EUR/USD is still in the process of constructing an upward trend segment. The wave structure continues to depend entirely on the news background—particularly decisions by Trump and the internal and external policies of the new White House Administration. The targets for the current trend could reach as high as the 1.25 area. With the news flow unchanged, I continue to stay long, even after reaching my first target near 1.1875, which is equivalent to a 161.8% Fibonacci level. By year-end, I expect the euro to rise to 1.2245, which matches the 200.0% Fibonacci level.

Wave Pattern for GBP/USD:

The GBP/USD wave pattern remains intact. We're dealing with an upward, impulsive part of the trend. With Trump at the helm, markets could face plenty more shocks and reversals, potentially affecting the wave picture—but for now, the main scenario remains whole, as Trump's policies have not changed. The upward wave targets are around the 261.8% Fibonacci level. Currently, I expect the pair to continue rising within wave 3 of 5, targeting 1.4017.

Main Principles of My Analysis:

1. Wave structures should be simple and clear. Complicated structures are hard to trade and often signal changes.
2. If you aren't confident about the market, it's better to stay out.
3. There can never be 100% confidence in the market's direction. Always remember to use stop-loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.