Donald Trump has decided to raise tariffs on imports from South Korea from 15% to 25%. This decision was prompted by the lengthy ratification process of the trade agreement by the South Korean Parliament, which was reached last year. Trump accused the South Korean parliament of failing to fulfill the terms of the "historic trade agreement with the US," and thus, the tariffs on all goods imported from the country will be immediately increased to 25%.
This news is already well known, but I would like to highlight other points. Market participants know that Trump managed to conclude several very profitable trade deals for the US last year, but all of them were made "under the gun." Simply put, Trump resorted to outright blackmail: either a deal favorable to Washington or trade tariffs. According to the agreements concluded, countries not only have to agree to tariffs and abandon tariffs on American goods, but also commit to investing hundreds of billions of dollars into the American economy with no profit from it. Additionally, they must also purchase energy resources from the US for hundreds of billions of dollars. I fail to see the benefit for other countries.
However, it seems that there is still some benefit, but there are no clear terms for each agreement. It appears that Trump verbally discussed the terms of the agreements with the presidents of other countries, but each understood them differently. For example, in Korea, it was reported that a $350 billion investment should be directed to South Korean companies that open plants in the US. Trump, however, believes that the National Bank of South Korea should simply pay America $350 billion or at least buy stocks with that money. As a result, the deal has been stalled precisely because of this point.
Seoul also reported that it had not received any official notifications from Washington about the increase in trade tariffs. Knowing Donald Trump, one can assume anything. Trump decided to announce the increase in tariffs through his social media platform. No official directives have been issued by him. Therefore, at this point, it is unclear whether the tariffs will be raised or if Trump simply wanted to expedite the process.
In any case, the market has reacted very negatively to the potential escalation of the Global Trade War. Demand for the US currency is again declining, and the market may continue to sell the dollar as news from the White House floods in.
Wave Picture for EUR/USD:Based on my analysis of EUR/USD, I conclude that the instrument is continuing to build an upward trend segment. Trump's policy 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 reach the 25-figure mark. At the moment, I believe corrective wave 4 has completed its formation, so I expect further increases in quotes, with the first target around 1.2040.
The wave picture for the GBP/USD instrument has become clearer. Currently, the presumed wave 5 is forming within wave 5, but the internal wave structure of global wave 5 may take a much more extended form. I believe that the price increase will continue in the near future, with targets around 1.3913, corresponding to 127.2% on the Fibonacci. After the current five-wave formation completes, the instrument may build three corrective waves. However, the upward segment is not yet complete, and after the correction, I expect a new impulsive segment of the trend towards the 42-figure.
Key Principles of My Analysis:Wave structures should be simple and clear. Complex structures are hard to play back and often carry changes.If there is no confidence in what is happening in the market, it is better not to enter.There can never be 100% certainty in the direction of movement. Do not forget about protective Stop Loss orders.Wave analysis can be combined with other forms of analysis and trading strategies.