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30.01.2026 12:55 AM
Germany remains the locomotive of the European economy, which has not been in good shape in recent years. The German economy is stagnating, German production is increasingly contracting, and German companies are significantly losing out to foreign competitors, especially Chinese ones. This problem did not arise yesterday; it has been brewing for years. I would like to remind you that, for almost the last two decades, the euro has been declining in value while the dollar has been rising. It is no secret that a cheap national currency makes it easier for exporters. In an export-oriented economy, exports have a powerful influence on GDP volumes. However, the problem lies precisely in the fact that even with a weak euro, Germany's exports and those of the entire EU have hardly increased in recent years.
Now, the US dollar has been losing value for a whole year, while the euro is rising. What does this mean for European and German companies? This means their sales abroad will decline. German Chancellor Friedrich Merz has even noted this issue, and previously, Christine Lagarde has spoken about it numerous times. However, the European Union has taken a very advantageous position in this regard, which Donald Trump intends to correct. Undoubtedly, if the exchange rate of your currency is low and the quality of your products is high, it is easier to sell goods all over the world. But if the currency's exchange rate rises, demand for goods abroad declines. This poses a significant threat to the German economy, as Merz has pointed out.
Interestingly, Trump does not consider the current dollar exchange rate to be low, despite its drop from $1.02 to $1.20 over the past 12 months. Recently, he stated that he is impressed by the decline of the US currency, welcomes this trend, and believes that the dollar should be even cheaper. Why? So that American manufacturers can sell more goods and boost exports. Thus, it turns out that developed countries with export-driven economies are interested in weakening their own currencies. The European Union has benefited from the declining euro for nearly 20 years; now it is time to take advantage of a cheaper US dollar.
Based on all of the above, the European economy may face new problems in the coming years. However, let's agree that we are not interested in the problems of the European Union, but rather in the direction of the EUR/USD instrument. In my opinion, in the unspoken currency war between the EU and the US, Trump will win. Almost all of his actions spark a strong desire among market participants to flee from dollar-denominated assets.
Based on the analysis of EUR/USD, I conclude that the instrument continues to build an upward trend. Donald Trump's policies and the Fed's monetary policy remain significant factors in the long-term decline of the US dollar. The targets for the current section of the trend may reach the 25th figure. At the moment, I believe that the global wave 4 has completed its formation, so I expect further increases in quotes. However, in the near term, I foresee a downward wave, as the series of waves a-b-c-d-e also appears complete. In any case, I would not advise anyone to trade the correction at this time.
The wave picture for the GBP/USD instrument has become clearer. Currently, the presumed wave 5 of 5 is still forming, but the internal wave structure of global wave 5 may take on a much more elongated appearance. I believe that the current bullish set of waves is nearing its conclusion or has already completed. Therefore, a corrective wave or set of waves may begin to form soon, after which the main trend will likely resume with targets positioned above the 39 figure.
