FX.co ★ How Long Will the American "Shutdown" Last?

For the 34th day in a row, the "shutdown" in America continues, which was "supposed to be resolved in 2 weeks." Democrats and Republicans continue to hold formal votes in the Senate, where no one seems willing to concede. Therefore, each new meeting may take place in a friendly atmosphere over coffee and pastries, with the outcome known in advance. Donald Trump does not seem concerned about the pause in government and state operations, and the lack of significant economic reports appears to work in his favor. At least for the dollar, which, despite the "shutdown," saw demand increase throughout October.

For President Trump, the "shutdown" might only be advantageous if the US labor market has ceased to "cool"; however, no one can say for sure. The latest ADP report signaled the first negative figure in new job creation in four years. Therefore, it is unlikely that this situation is beneficial for Trump. Most likely, the US president does not want to back down from his "Big, Beautiful Bill," parts of which Democrats are striving to cancel through a new funding bill for the next year.

This situation is increasingly becoming a matter of principle for the American president. He managed to push this law through the Congress mill with considerable difficulty and does not want to give up any of its provisions.

Democrats, in my view, hold a similarly advantageous position to the European Central Bank regarding monetary policy and inflation. They have no reason to hurry, while the American public blames Republicans for the "shutdown." Their stance is clear and popular—they want to restore subsidies and various social and medical programs for ordinary Americans. Thus, the "Robin Hood Party" enjoys approval among the population.

Economists note that every week the American economy loses a few hundredths of a percent of growth. While this might seem a minor loss, it is just the beginning. The loss will worsen over time and increase in magnitude. Considering this, economists believe that the "shutdown" will end within a week or two, although they believed that at the beginning of October as well. Personally, I hold a more skeptical view. In essence, the record for the longest "shutdown" is already being set.

Wave Analysis of EUR/USD:

Based on the analysis of EUR/USD, the instrument continues to build an upward trend section. Currently, the market is in a pause, but Donald Trump's policies and the Fed's remain significant factors in the future decline of the American currency. The targets for the current section of the trend may extend up to the 25 level. We are currently observing the construction of corrective wave 4, which takes on a very complex and elongated appearance. Therefore, in the near future, I still consider only buys, as any downward structures are corrective. The latest structure – a-b-c-d-e may be nearing its completion.

Wave Analysis of GBP/USD:

The wave pattern of the GBP/USD instrument has changed. We continue to deal with an upward, impulsive section of the trend, but its internal wave structure is becoming more complex. Wave 4 takes on a three-wave appearance, and its structure is significantly more elongated than that of wave 2. Another downward corrective structure is close to completion. I continue to expect the main wave structure to resume its development, with initial targets around the 38 and 40 levels, and I believe this could occur as early as the beginning of November.

Key Principles of My Analysis:

1. Wave structures must be simple and comprehensible. Complex structures are difficult to trade and are often subject to change.
2. If there is no confidence in market movements, it is better not to enter the market.
3. There is no such thing as 100% certainty in directional movements, and there never can be. Always remember to use protective stop-loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.