The name of the new Federal Reserve Chair, who will take office in May 2026, is effectively already known. At least, economists do not doubt that it will be current Trump economic advisor Kevin Hassett. So far, Donald Trump has appointed only one governor to the FOMC—Stephen Miran. Mr. Miran has immediately begun to fully utilize the leverage given to him. At each meeting, he proudly votes for a 50-basis-point easing of the Fed's monetary policy all by himself. Therefore, many expect Hassett to also start making "ultra-dovish" statements, signaling what to expect from the Fed in 2026.

However, Hassett holds a different position. He verbally supports Jerome Powell and the FOMC Committee. According to Hassett, the Fed's main task is to respond to changing economic conditions, make timely decisions, and explain to markets why those decisions were made. Thus, Hassett indicates that he supports the Fed's current easing policy. The labor market is "cooling," the Fed is lowering interest rates, and it all makes sense.

Nevertheless, market participants are not entirely convinced by the Trump advisor's words, as they sense a catch. Following the failure of the "plan" with Jerome Powell's appointment, through whom Trump wanted to control the Fed during his first presidential term, the US president will be very meticulous in choosing the new director. Therefore, I do not doubt that he will choose someone fully aligned with Trump's economic views. I remind you that the White House leader and the US Secretary of the Treasury are calling for easing monetary policy down to 2% or even lower. Therefore, Hassett will likely be tasked with increasing pressure on the "neutral" governors from within the Fed.

If this assumption is correct, the battle between Trump and the Fed will continue into 2026. I believe that after the December meeting, the FOMC will take a pause, the duration of which will depend solely on the inflation rate. If inflation begins to drop towards 2%, the Fed may resume easing its monetary policy. However, it is hard to believe that inflation will start moving towards 2%. Thus, the Fed's policy is likely to remain more "hawkish" than the president would like.

Wave Picture for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the instrument continues to build an upward trend segment. In recent months, the market has paused, but Donald Trump's policies and the Fed's remain significant factors in the US dollar's future decline. The targets for the current trend segment could extend to the 25th figure. However, the last upward trend segment has again taken on a corrective appearance, indicating that a minimum bearish wave of this segment may now begin, while the maximum is a potential new bearish corrective wave formation.

Wave Picture for GBP/USD:

The wave structure for GBP/USD has changed. We continue to deal with an upward impulse trend segment, but its internal wave structure has become complex. The bearish corrective structure a-b-c-d-e in C in 4 appears quite complete. If this is indeed the case, I expect the main trend segment to resume its formation with initial targets around the 38 and 40 figures. However, the wave 4 itself may take on a five-wave appearance.

In the short term, I expected wave 3 or c to form, with targets around 1.3280 and 1.3360, corresponding to the 76.4% and 61.8% Fibonacci retracement levels. These targets have been reached. Wave 3 or c may continue its formation, but the current wave structure is more likely corrective again. Therefore, a decline this week is possible, and the attempt to break the 1.3360 level has been unsuccessful.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to play and often carry changes.
2. If there is uncertainty in what is happening in the market, it is better not to enter.
3. There is no absolute certainty in the direction of movement, and there never can be. Don't forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.