Negotiations between Iran and the U.S. could indeed falter due to yet another act of aggression from Washington. This was indirectly indicated on Tuesday by Ebrahim Zolfaghari, a representative of the IRGC (Islamic Revolutionary Guard Corps). Zolfaghari stated that Washington continues to engage in its "military adventures," and that, personally, he sees no possibility of further negotiations following Tuesday's events. Zolfaghari also mentioned that the White House understands only force, and therefore, the whole world should prepare for oil prices to reach $200. However, he did not specify what actions Iran plans to take to double oil prices from current levels.
It's worth recalling that most oil refining plants and energy facilities in the region have been non-operational since Iran's strikes against them in March of this year. Consequently, there is already little infrastructure left in the region that could be destroyed to further reduce oil production. Perhaps Iran intends to target the oil and gas facilities of U.S. allied forces outside the Middle East. Frankly, this assumption doesn't seem out of the ordinary.
Iran has repeatedly shown that it will respond to strikes with strikes of its own. If, amidst "very productive negotiations," America strikes Iranian infrastructure and navy vessels, it seems a sufficient reason for retaliation and a cessation of negotiations. However, once again, one hopes for the best.
The consequences of Iranian counterstrikes against oil and gas infrastructure in any region of the world are likely clear. The oil deficit would become even more pronounced, and prices for all grades of oil would rise again. Recently, prices stabilized below $100 per barrel (Brent), but this won't last long—until the next Iranian strikes. On Tuesday, both grades of oil had already increased by about 7% in value. This is just the beginning; more trouble could be ahead, though no one wants such trouble.
Regarding the U.S. dollar, any escalation and any attacks in the Middle East will provide new reasons for market participants to increase their demand for the safe dollar. Therefore, the chances of strengthening the American currency this week are once again increasing.
Wave Picture for EUR/USD:Based on the conducted analysis of EUR/USD, I conclude that the instrument remains within an upward section of the trend (lower picture), while in a more short-term perspective, it is within a corrective structure. The corrective wave set a-b-c appears to be complete. Consequently, the construction of wave 3 or C continues, which may be part of wave C. The entire wave C (if the current wave marking is correct) may complete its formation much below the 14 figure. However, for such a scenario, strong geopolitical support will be required. Otherwise, the downward wave set may take the form of a-b-c and be completed around the 1.1578 mark.
Wave Picture for GBP/USD:The wave picture for the GBP/USD instrument has become clearer over time. We now see a distinct upward structure on the charts, which is complete. Therefore, I expect a downward wave set to form, which may take an impulsive form and align with the impulsive structure of the EUR/USD instrument. Consequently, after a 300-pip decline, a corrective wave can be expected, followed by a new drop towards the 30-31 figures. I had warned in advance about the new decline of the pound, but I expected a correction. However, the harsh reality is that this may be a full-fledged impulsive structure, given the strength of its first wave.
Main Principles of My Analysis:Wave structures should be simple and clear. Complex structures are difficult to trade and often involve changes.If there is no certainty about what is happening in the market, it is better not to enter it.There is never 100% certainty in the direction of movement. Remember to use protective Stop Loss orders.Wave analysis can be combined with other types of analysis and trading strategies.