Market participants continue to debate what decision will be made at the FOMC meeting on September 17. According to the CME FedWatch tool, the current probability of a 25-basis-point rate cut stands at 85%. This is similar to what was said before Jerome Powell's recent speech in Jackson Hole. Thus, albeit belatedly, the market has concluded that Powell did not promise to cut rates in September, nor did he even hint at such a decision.

Powell only admitted that a rate cut is possible "in the near future". He has been making similar statements for several consecutive months, and he has not denied the possibility of resuming the monetary easing cycle since the beginning of the year. Therefore, the first thing to understand is that the chances for a new round of easing have not increased over the past week.

Additionally, the prevailing opinion that four or more FOMC members are already prepared to vote for a rate cut at the next meeting, regardless of the economic reports to be released beforehand, seems quite doubtful. I believe this is entirely untrue. The fact that Christopher Waller and Michelle Bowman are ready to vote for a rate cut surprises no one and does not mean that even one more governor will join them. I would remind you that some FOMC members are ready to vote for easing, but only if the supporting data is available.

So, three weeks before the next meeting and before the latest reports on inflation and the labor market are released, here is the current picture: Bowman and Waller will vote for a cut under any circumstances. The opinion of the other Federal Reserve governors will directly depend on upcoming reports on the labor market, unemployment, and inflation. Therefore, the current 85% probability of a rate cut is just the market's expectation. One could just as well say that the market, with 85% probability, does not expect an acceleration in inflation in August and anticipates a continued "cooling" of the labor market. Until the FOMC meeting, the US dollar is likely to remain under pressure from the standoff between Donald Trump and Lisa Cook, which threatens to escalate into a legal battle.

Wave Analysis for EUR/USD:

Based on the EUR/USD analysis, I conclude that the instrument continues to build a bullish trend segment. The wave layout still entirely depends on the news background connected to Trump's decisions and US foreign policy. The targets of this trend segment could extend up to the 1.25 level. Accordingly, I continue to consider buying, with targets around 1.1875, which is equivalent to 161.8% Fibonacci, and higher. I believe that wave 4 has been completed. Thus, now is still a good time to buy.

Wave Analysis for GBP/USD:

The wave picture for the GBP/USD remains unchanged. We are dealing with a bullish, impulsive section of the trend. Under Trump, the markets may face many more shocks and reversals, which could seriously affect the wave picture, but as of now, the working scenario remains intact. The targets for the bullish segment of the trend are now located around 1.4017. At this time, I believe that the downward wave 4 is complete. Wave 2 in 5 may also be finished. Therefore, I recommend buying with a target of 1.4017.

The Main Principles of My Analysis:

1. Wave structures should be simple and clear. Complicated structures are difficult to trade and often result in changes.
2. If you are not confident about what is happening in the market, it is better to stay out.
3. There can never be 100% certainty in market direction. Do not forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.