Michelle Bowman was appointed to her position by Donald Trump in 2018, so her dovish stance raises no questions. However, concerns over the labor market are so significant that policymakers Mary Daly, Neel Kashkari, and Lisa Cook have also expressed their willingness to vote for a rate cut in September. That said, they are only referring to the September meeting, not to easing at every meeting through the end of the year. For the record, the market is not yet pricing in the most dovish scenario of three rounds of easing.

Bowman also sees no inflation risks that could be caused by Trump's tariffs. Unfortunately, official statistics suggest otherwise. In recent months, U.S. inflation has risen from 2.3% to 2.7% year-on-year and could reach 2.8% in July. While such growth rates can certainly be viewed as moderate, the fact remains that the consumer price index is accelerating.

It is worth recalling that many companies importing foreign goods and raw materials took precautions in advance and prepared for Trump's tariff war. They simply stocked up on the necessary goods and then sold them at old prices for several months to avoid losing customers. However, any stockpile eventually runs out, and imports have become more expensive by record amounts. The weighted average tariffs on imports are now at their highest point in the past 100 years.

I tend to believe that no more than 20% of the tariffs' impact has yet shown up in the inflation data. I expect inflation to rise much more sharply by year-end. Therefore, it is too early to draw conclusions. Jerome Powell has repeatedly noted that the first assessments of the impact of Trump's tariffs on the economy should be made in the fall. He has also said that the tariffs have not yet taken their final form, meaning their negative impact could intensify. More time will therefore be needed to understand how economic indicators will react. In my view, inflation will rise, but the Federal Reserve will still cut rates.

Wave Pattern for EUR/USD:

Based on the EUR/USD analysis, I conclude that the instrument continues building an upward section of the trend. The wave count still entirely depends on the news backdrop related to Trump's decisions and U.S. foreign policy. The targets for this trend section may extend up to the 1.25 area. Therefore, I continue to consider buying with targets around 1.1875, which corresponds to 161.8% Fibonacci, and higher. I assume that the construction of wave 4 has been completed. Accordingly, now is a good time to buy.

Wave Pattern for GBP/USD:

The wave pattern for GBP/USD remains unchanged. We are dealing with an upward, impulsive section of the trend. Under Trump, markets may still face numerous shocks and reversals that could significantly affect the wave structure, but for now, the working scenario remains intact. The targets for the upward section are now located near 1.4017. At present, I assume that the construction of the downward wave 4 has been completed. Therefore, I expect the upward wave set to continue and consider buying with a target of 1.4017.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often change.
2. If there is no confidence in what is happening in the market, it is better to stay out.
3. One can never have 100% certainty in the market's direction. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.