Forex Analysis & Reviews: 16.05.2025 - Are Things Really So...

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16.05.2025 12:40 AM

Are Things Really So Optimistic with the Deals with China and the UK?

Last week, Donald Trump announced the signing of the first deal with the United Kingdom under his "America's Liberation" campaign. It was later revealed that the deal had not been signed yet, and negotiations may take several more weeks. However, it seems likely that this will be Trump's first official "victory." It's worth noting that the deal with the UK initially appeared easy to achieve. Britain and the U.S. have always maintained good relations, although that didn't stop Trump from imposing tariffs on steel and aluminum imports from the UK. Under the future agreement, tariffs on steel and aluminum may be lifted, and car import duties could be reduced to 10%.

Still, there's little reason for celebration. The deal with the UK is estimated to be worth just $6 billion for the U.S. budget, hardly a major sum. One deal has been signed, but 74 others remain. So far, the U.S. president's efficiency rate isn't very high. London has never been a major exporter of steel and aluminum, making that part of the deal largely symbolic. It's also important to note that the UK is one of the few countries in the world that buys more from the U.S. than it sells. Therefore, Washington's complaints about London were limited from the outset.

In the case of China, tariffs have been reduced, allowing trade between the two countries to resume, although in reality, trade never truly ceased. Anticipated for some time, these tariffs had prompted Chinese exporters to develop workarounds. They achieved this by routing exports to the U.S. through third countries and by increasing shipments to Southeast Asia, Europe, Africa, and Latin America. As a result, even during the month of elevated tariffs, Chinese exports did not decline; in fact, they experienced year-over-year growth.

Many economists note that even 30% tariffs won't be "fatal" for Chinese companies. First, re-routing through third countries remains an option. Second, demand for Chinese goods remains strong globally. This is especially true in recent years, as China has improved not just in price competitiveness but also in quality.

Wave Structure of EUR/USD

Based on the analysis of EUR/USD, I conclude that the instrument is continuing to form an upward wave segment of the trend. In the near future, the wave structure will entirely depend on the position and actions of the U.S. president. This must always be kept in mind. Wave 3 of the upward segment has begun, with targets possibly reaching as high as the 1.2500 area. Achieving these levels will depend solely on Trump's policies. At the moment, wave 2 of wave 3 appears close to completion. Therefore, I consider long positions with targets above the 1.1572 mark, corresponding to the 423.6% Fibonacci level. However, Trump could easily reverse this bullish trend downward.

Wave Structure of GBP/USD

The wave structure for GBP/USD has changed. We are now dealing with an upward, impulsive segment of the trend. Unfortunately, under Donald Trump, markets may experience many more shocks and reversals that don't align with wave counts or any form of technical analysis. Wave 3 of the current uptrend is ongoing, with near-term targets at 1.3541 and 1.3714. As a result, I continue to consider buying opportunities, as the market shows no interest in reversing the trend just yet.

Core Principles of My Analysis

Wave structures should be simple and clear. Complex structures are hard to interpret and often involve unexpected changes.
If you're unsure about the market's current direction, it's better to stay out.
There is never 100% certainty in market direction. Always use protective Stop Loss orders.
Wave analysis can and should be combined with other types of analysis and trading strategies.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.