FX.co ★ Stephen Miran Compromises Trump

The FOMC meeting could amuse anyone who follows American news even a little. At the end of August, one of the Fed governors, Adriana Kugler, left her post under rather strange circumstances, just a few months before the end of her term. I can already imagine the most expensive champagne being popped open in the White House to celebrate. Trump didn't have to search long for her replacement. He nominated Stephen Miran, who was and still is Donald Trump's economic advisor.

Even if you're not an expert in staffing at U.S. government agencies, it's easy to guess that Miran cannot legally hold two positions at once—one directly linked to politics, and the other to monetary policy. But Trump (and I'm convinced this brilliant plan came straight from the U.S. President) found a solution. Miran will simply take an unpaid leave of absence for four months (until the end of Adriana Kugler's term), and during that time will be actively pressing the button for a 50 basis point rate cut at every Fed meeting. In fact, it was his second day on the job, and Miran was the only governor who voted in favor of a half-point rate cut.

From the outside, the situation looks like a farce, and Miran's actions only confirm what is obvious to all: Miran was put on the Fed Board of Governors for one reason only—to carry out Trump's directives. It's also not hard to predict that all of Trump's future appointees will simply keep pressing the button for maximum rate cuts. So, if Trump does manage to fill the FOMC with his people, there is no doubt we'll see unprecedented and very fast monetary accommodation. It'll be very interesting to watch as some Fed governors vote to hold rates steady, while others push for cuts of half a percentage point or even a full point.

It's also worth noting that only Republicans voted for Miran's appointment. Not a single Republican voted against, and not a single Democrat voted in favor. So, again, there's little doubt that the Senate will also approve all of Trump's future nominees. How could it be otherwise, when there are more Republican senators than Democrats? Thus, all that remains for Trump is to keep pressuring the current Fed governors. The battle with Lisa Cook continues, and so does the one with Jerome Powell. Soon, we may learn the name of the third "lucky" appointee to come under Trump's sights.

Wave outlook for EUR/USD:

Based on my analysis, I conclude that EUR/USD continues to build an upward segment of the trend. The wave structure remains entirely dependent on news flow, particularly decisions made by Trump and the domestic and foreign policy of the new White House administration. The targets for the current leg of the trend could extend toward the 1.25 area. The news background remains the same, so I'm staying long, despite the first target near 1.1875 (which corresponds to 161.8% Fibonacci) already being worked out. By year-end, I expect the euro to rise to 1.2245, aligning with 200.0% Fibonacci.

Wave outlook for GBP/USD:

The wave pattern for GBP/USD remains unchanged. We're looking at an upward, impulsive section of the trend. Under Trump, the markets may face plenty more upsets and reversals, which could seriously impact the wave picture, but for now, the working scenario remains intact, and Trump's policy is consistent. The targets for the upward move are around the 261.8% Fibonacci. At this point, I expect the quotes to keep increasing in wave 3 of 5, targeting 1.4017.

Main principles of my analysis:

1. Wave structures should be simple and easy to understand. Complex structures are harder to trade and often signal changes.
2. If you aren't confident in what's happening on the market, it's better not to enter.
3. There can never be 100% certainty about market direction. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.