FX.co ★ Philip Lane does not want to rush into lowering rates

The European currency continues to choose between two possible paths. Of course, this sounds like a truism since there are always only two paths for any pair. However, the market has now taken an open pause, obviously deciding the fate of the euro currency. Let me remind you of my point of view regarding this pair. The current rise in quotes is a corrective wave 2 or b, which should have ended long ago. Certainly, any corrective wave can reach 100% of the previous impulsive one, and besides, there are wave structures in which only corrective waves are present.

However, as mentioned, I see no point in working with unreadable wave structures that constantly become more complex and change. Therefore, I am assuming that wave 2 or b is complete. If this is indeed the case, the construction of wave 3 or c has already begun, and the market needs a little push in the right direction.

News background could play a role if it were more eloquent. It's better to say if it existed at all. Last week, we only saw a report on US inflation regarding significant events. A new week has begun, and in the EU, a couple of reports have been released, again showing the weak state of the European economy. Nothing is changing.

I also want to highlight the speech of the Chief Economist of the ECB, Philip Lane. He stated on Monday that too rapid a pace of monetary policy easing could be very dangerous. Lane is still unsure about a stable slowdown in the Consumer Price Index and wants the regulator to have a "reserve plan" in case inflation accelerates again.

Lane also announced that the ECB would only consider lowering rates after June. The regulator wants to monitor incoming information in the year's first half to draw key conclusions in early summer. Afterward, either the process of easing will begin, or the pause in changing interest rates will continue for some time. But in any case, this issue will be decided at the beginning of summer.

Based on all of the above, the ECB is still maintaining a "hawkish" stance, but at the same time, the Federal Reserve has not yet lowered rates or even promised to do so in March.

In conclusion, the wave pattern of the pound/dollar pair implies a decline. At the moment, I am considering selling the pair with targets located below the 1.2039 level because wave 2 or b should ultimately end and may end at any moment. There are already some signs of its completion. However, I do not recommend rushing with conclusions and sales. I would wait for a successful attempt to break the 1.2472 level, after which it will be much easier to believe in the pair's further decline.