FX.co ★ Iran's Latest Statements and the Market Response

The market has likely become accustomed to the fact that almost all information on U.S.-Iran negotiations comes only from the U.S. Therefore, any statement from Iran (even if not from the highest officials) attracts heightened attention. On Wednesday, former Iranian Foreign Minister Ali Bagheri Kani stated that the stockpiles of highly enriched uranium are not a subject for discussion in the deal between Iran and the U.S. Frankly, I am unsure how to interpret this statement, as if Tehran is unwilling to accept the export of uranium, the deal is unlikely to be signed.

Previously, there were reports that Tehran agreed to the export of uranium stockpiles, but only if the storage country would be China. Now it turns out that the movement of enriched uranium is not even on the table for discussion. Consequently, we receive contradictory information, making it impossible to understand the true state of affairs.

However, I find myself believing Ali Bagheri Kani's statements, as he is part of the negotiating team with the U.S. Therefore, Kani has access to all the necessary information. Kani also stated that until all issues are absolutely agreed upon, Tehran believes there are no agreements with Washington. He also mentioned that after the conflict is resolved, control over the Strait of Hormuz will remain with Iran, which is also non-negotiable. Kani believes the procedure for navigating the strait will no longer be the same as before, but he did not clarify exactly what these changes would entail.

Despite the rather unflattering statements from the Iranian side of the conflict, the market did not respond with new dollar purchases on Wednesday. As I already mentioned, this might mean nothing, as the EUR/USD and GBP/USD instruments may be forming a corrective wave before a new decline. There were no economic news events during the day, so it is currently difficult to say whether the dollar's decline is due to any particular event.

Personally, I see only one thing day after day: the parties cannot come to an agreement. On Tuesday, there was a new escalation near the Strait of Hormuz, and on Wednesday, an Iranian parliament member stated the impossibility of exporting uranium. At what stage the negotiations are, which Trump claimed were already 95% concluded, remains unclear. All of this makes the dollar more attractive to market participants.

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:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often entail changes.
2. If there is no certainty about what is happening in the market, it is better not to enter it.
3. There is never 100% certainty in the direction of movement. Remember to use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.