18.12.202300:14 Forex-elemzések és áttekintések: What conclusions can be drawn after Lagarde's speech?

We witnessed three central bank meetings in just a week, which is quite rare. Typically, each central bank holds eight meetings in a year, but this doesn't mean that the dates of each bank coincide. Usually, all three central banks conduct their meetings within a 7-8 day period. However, this time they held meetings almost simultaneously. In normal circumstances, the market has enough time to thoroughly analyze and prepare for the next meeting, but this time it wasn't the case. This explains the strong market reaction and even a slight panic. The euro and the pound rose against the current wave layout for two days, and on Friday, demand started to decrease for both currencies for no significant reasons.

I haven't covered European Central Bank President Christine Lagarde's speech in my reviews yet, but it also supported the euro. So, what did Lagarde say? Firstly, she said that the central bank is not currently discussing a rate cut. This is already a reassuring factor for the euro, as many market participants had speculated that the ECB would also announce readiness to adopt a more dovish policy. After all, inflation in the EU has already fallen to 2.4% YoY, so statements about a rate cut would have been logical.

Secondly, Lagarde emphasizes vigilance in inflation battle and cautioned against premature optimism. This certainly does not mean that the ECB plans another rate hike (it is simply not necessary at the moment), but it does mean that the current rate may remain unchanged for several more meetings.

Thirdly, Lagarde mentioned that inflation may accelerate in the coming months. If we are talking about a slight acceleration, there is nothing to worry about, and there will be no risks of the need for a rate hike. In 2024, according to Lagarde, inflation will decrease very slowly, but if we start from 2.4%, even a gradual decrease will be enough to return to the target level.

Lagarde also highlighted the rapid pace of wage growth, which hinders the fight against high inflation, as well as a slowdown in the pace of production. Upside risks to inflation include the heightened geopolitical tensions, which could raise energy prices in the near term, and extreme weather events, which could drive up food prices

Based on the analysis, I conclude that a bearish wave pattern is still being formed. The pair has reached the targets around the 1.0463 mark, and the fact that the pair has yet to surpass this level indicates that the market is ready to build a corrective wave. Wave 2 or b has taken on a completed form, so in the near future I expect an impulsive descending wave 3 or c with a significant decline in the instrument. I still recommend selling with targets below the low of wave 1 or a. At the moment, wave 2 or b can be considered completed.

The wave pattern for the GBP/USD pair suggests a decline within the descending wave 3 or c. At this time, I can recommend selling the instrument with targets below the 1.2039 mark because wave 2 or b will eventually end, and it could do so at any moment. The longer it takes, the stronger the fall. The peak of the assumed wave c in 2 or b can be used for short positions, and the order limiting possible losses on transactions can be placed above it.