Demand for the American currency has increased for the fourth consecutive week, and, in my view, if the reasons were purely the Fed's monetary policy, the move would have ended long ago. I believe the Fed's stance did become more hawkish in September, but not to the extent that the US currency would strengthen for almost a month without rest or pauses. Moreover, this week some FOMC officials clarified that a hawkish tilt does not automatically mean rate increases at every meeting through year-end. Therefore, the market's hawkish hopes are unlikely to be fulfilled in full.

Economists note that a bundle of factors supported the dollar in September, including the Fed's firmer stance, heightened global geopolitical tensions, and the ongoing artificial intelligence boom. Why, for example, the AI factor did not support the dollar earlier is not explained. As for geopolitical tensions, the situation in the Middle East has not changed in recent weeks and months. Iran and the US continue to pretend to seek a deal, while in reality neither side is prepared to make meaningful concessions, at least on key issues. Each side seeks a low-cost victory without significant compromise.

Lately, however, statements from Moscow and some European leaders warning of the possibility of war have become more frequent, which does not improve investor sentiment. It is possible that capital is already beginning to flow out of the European Union, and, combined with sovereign bond sales in both the US and Europe, that is creating a serious imbalance across financial markets.

Economists also point to risks for the dollar such as dedollarization, US public debt rising above $40 trillion, and the prospect of global tariffs under Donald Trump. Yet it appears that an age-old financial proverb is at work again: in any unclear situation, buy the dollar. Bank of America said it expects further dollar strength for the remainder of the year. HSBC does not expect anything remarkable from the US currency. Citi believes dollar gains will be moderate, even though the US currency has been rising for almost a month. Views differ because no one really understands the precise causes of the September rally. In my view, after the completion of wave E, an extended upward segment of the trend will begin.

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Wave analysis of EUR/USD

Based on my analysis of EUR/USD, I conclude the instrument remains within a global corrective trend segment A-B-C-D-E. If this assumption is correct, declines will continue toward targets below the low of wave C—1.1325. I considered this scenario an alternative, and if not for the Fed meeting, it would have remained so—a reserve case. But the Fed surprised markets, leaving no option but a new wave of dollar buying. Purchases have continued for several weeks, however, despite the absence of fresh supporting factors for the dollar. I would not open shorts in such a news environment and would, instead, prepare for a reversal.

Wave analysis of GBP/USD

The wave structure for GBP/USD has become fairly clear but could become more complex. Charts show a distinct A-B-C corrective structure, which after the Fed meeting could transform into A-B-C-D-E. If that assumption holds, the pound will continue to decline toward targets below the 1.31 area near the low of wave C. However, completion of a similar structure on the euro could prompt the pound's structure to finish at any stage.

Core principles of my analysis:

1) Wave structures should be simple and comprehensible. Complex structures are hard to trade and often change.

2) If you are not confident about what is happening in the market, it is better not to enter.

3) There is never 100% certainty about direction. Do not forget protective stop-loss orders.

4) Wave analysis can be combined with other analytical methods and trading strategies.