30.01.202500:42 Analisis Forex & Kajian: ECB Meeting Preview

Unlike the Federal Reserve meeting, which generates some intrigue due to Jerome Powell's speech, the European Central Bank meeting lacks such suspense. The ECB has clearly outlined its monetary policy direction, and there is no reason to change it at the very first meeting of 2025. Christine Lagarde and her colleagues have repeatedly stated—even in January—that interest rates will be lowered to neutral levels in the first half of the year. Some ECB policymakers even believe that the central bank might go further than that. The ECB remains confident that inflation will be brought back to 2% this year, which eliminates the need to keep rates elevated and risk slowing economic growth unnecessarily.

Lagarde and her team acknowledge that Donald Trump's protectionist policies could lead to inflationary pressures that might also affect the European Union. However, tariffs on European imports into the U.S. have not yet been implemented, and it is likely that Brussels and Washington will engage in negotiations first. Therefore, there is currently no immediate concern, allowing the ECB to stick to its existing plan.

As a result, when the ECB announces its decision on Thursday, it is highly likely that rates will be cut by another 25 basis points. The market is fully prepared for this outcome, meaning there will be little immediate incentive for traders to sell the euro, as this rate cut has already been priced in. Consequently, demand for the euro may increase again on Thursday afternoon, and, as is often the case, the euro's movement could also drive the British pound higher.

Of course, something can always go wrong. Powell will be too dovish. Or the market will interpret his speech as too dovish. Or Lagarde will say something the market did not expect. And wave bv 2 can take a completely different form: it will end faster than it should, or, on the contrary, it will be very deep. Nevertheless, I have voiced the basic scenario, and I will proceed from it. It is always necessary to remember that central bank meetings are very important events, and the market reaction can be strong.

Wave Analysis for EUR/USD:

Based on my EUR/USD analysis, the pair is still forming a bearish trend segment. The first wave of this segment appears well-structured and complete. Therefore, a three-wave or more complex corrective structure should be expected, presenting new selling opportunities at the highest points of this structure. Wave A within Wave 2 has already concluded, meaning Wave B within Wave 2 has begun and may finish as early as today.

Wave Analysis for GBP/USD:

The wave structure of GBP/USD also indicates that the bearish trend remains intact, with Wave 1 already completed. Now, we should wait for a clear corrective wave (or a set of waves), after which new selling opportunities can be identified. The minimum target for the corrective structure is near the 1.26 level, while a more optimistic target is around 1.28. This could be an ideal time to complete Wave 1 within Wave 2.

Core Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are challenging to trade and often subject to change.
2. If market conditions are unclear, it is better to stay out.
3. There is never 100% certainty in market direction. Always use Stop Loss orders.
4. Wave analysis can be combined with other analytical methods and trading strategies.