empty
InstaForex - Official partner of Dragon Racing
InstaForex - Official partner of Dragon Racing
This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.
Start as Beginner
How to start trading
Useful information
Training and recordings
InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.
Become Investor
PAMM System
ForexCopy System
Passive investments
Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.
Become Partner
Main Page
Partner Area
Advantages for Affiliates
Registration
This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.
All Promo Campaigns
Bonuses
Contests
Events
Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.
Full details
Forums
We are in social networks
Forex humour
Forex Portal
InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.
Learn More
History
Why Choose Us
InstaSport
Regulation
Company News
Awards
InstaForex Stars
InstaForex Offline
Headquarters
Key documents
Social Responsibility
30.03.2023 05:19 PM
ECB monetary policy report
Open trading account Open demo account

As I have had the opportunity to state more than once, a lot now depends on inflation and the monetary policy of central banks for both pairs. These are the indicators that market participants are observing. The European Central Bank (ECB) released an economic report today with a variety of data on important subjects. It predicted that the rate of inflation would remain unacceptably high for a long time. In 2025, the regulator projects that the consumer price index will have averaged 2.1%, 2.9%, and 5.3% in the previous three years. As a result, it will be at least three years before inflation reaches its desired amount. Let me tell you that the ECB and other central banks were actively promoting inflation for many years following the 2008 crisis. They failed to meet their target of 2% for ten years. Although it's difficult to comprehend now, that is not the sacramental significance. What is the likelihood that the ECB will handle inflation of about 10% in 3–4 years if it can't spread inflation from 0% or even from 1% to 2% within 10 years? In my opinion, one of the potential outcomes should be considered along with the ECB's forecasts.

I also want to point out that other institutions besides the Central Bank have the power to affect the economy's various sectors and metrics. According to the same ECB report, wage pressure has increased as a result of a strong labor market and workers' wishes to recover some of the wages lost due to inflation. In other words, as European employees became aware of the decline in their wages, they started to put in a little bit more effort to make up for their losses. Let me remind you that, according to the guiding principle "less money, less spending, less demand, less price growth," central banks view low wage growth as one of the methods for lowering inflation. From the perspective of the global economy, this might be a very clever strategy, but from the perspective of regular employees, it is not a useful way to accomplish the task.

This image is no longer relevant

The report also stated that although market tensions are still elevated and may result in tighter credit conditions and a decline in confidence, risks to the economy's prospects are gradually declining. Because of the decline in energy costs and the strong economic stability, GDP projections for 2023 have been updated. With the help of all this data, I can only come to one conclusion: the ECB won't increase interest rates significantly. They predict that it will take about three years for inflation to reach 2%, which indicates that the rate will cease increasing soon. So, three more raises of 25 basis points, plus or minus one increase, are what we can anticipate. Since this is a little higher than the Fed rate, the euro should not experience significant market support.

I draw the conclusion that the downward trend section's development is finished based on the analysis. However, the wave analysis for the euro is confused right now, making it challenging to determine where the pair is in the trend. Even after one wave up, which may be a complicated wave b, a new three-wave pattern of waves down can start to form. Therefore, based on the MACD reversals "up," I suggest cautious purchases with targets close to the 10th figure.

This image is no longer relevant

The wave pattern of the pound/dollar pair presumably represents the end of a segment of a downward trend (due solely to the correlation of the euro and the pound). According to the "up" reversals of the MACD indicator, it is possible to take into account purchases with targets higher than the 25-figure range at this moment. The possibility of developing a downward wave e, the targets of which are situated 500–600 points below the current price, is something I do not entirely rule out, though.

Chin Zhao,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
All Analytics
Wave analysis
GBP/USD Analysis on May 16, 2025 The wave structure for the GBP/USD instrument continues to indicate the formation of a bullish impulsive wave sequence. "Thanks" to Donald Trump, the wave pattern closely mirrors that of EUR/USD
Chin Zhao
18:43 2025-05-16 +02:00
2245
Wave analysis
EUR/USD Analysis on May 16, 2025 The wave structure on the 4-hour chart for the EUR/USD pair has transformed into an upward one and continues to hold this formation. I believe there is little doubt that
Chin Zhao
18:40 2025-05-16 +02:00
2140
Breaking Forecast Trading Plan Cryptocurrencies USD/RUB Russian Economy Video Analysis
Trading Instruments
EURUSD GBPUSD USDCHF USDCAD USDJPY AUDUSD EURGBP EURJPY NZDUSD EURNZD Silver Gold #CL #USDX COVID-19 Bitcoin
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/JPY. Analysis and Forecast

The bulls of the Japanese yen have not been significantly affected by the disappointing GDP report for Japan's first quarter. This is largely due to growing expectations that the Bank
Irina Yanina 18:38 2025-05-16 UTC+2

XAU/USD. Analysis and Forecast

Gold is experiencing renewed intraday pressure, falling below the key psychological level of $3200 during the first half of the European session on Friday. Optimism surrounding the trade truce between
Irina Yanina 18:37 2025-05-16 UTC+2

Market gets lost in crowd

Investors are so confident that Donald Trump is following the stock market's lead that the S&P 500 no longer needs a reason to rise. The broad equity index had been
Marek Petkovich 11:40 2025-05-16 UTC+2

Japan on the Brink of Recession

The GDP report published on Thursday revealed that Japan's economy contracted by 0.7% year-over-year in the first quarter—its first annual decline in the past year and significantly worse than expected
Kuvat Raharjo 11:00 2025-05-16 UTC+2

Investors Continue Digesting the Impact of the Tariff Truce Between the U.S. and China (There Is a Chance of Renewed Corrective Decline in Gold and Oil Prices)

Markets have fully priced in the outcome of the U.S.–China talks, which resulted in a 90-day trade truce. Weaker-than-expected U.S. economic data offset the early-week optimism. The recent rally lost
Pati Gani 10:49 2025-05-16 UTC+2

What to Pay Attention to on May 16? A Breakdown of Fundamental Events for Beginners

Few macroeconomic events are scheduled for Friday, and they are not more significant than the reports released on Thursday, which did not provoke any market reaction. In essence, the only
Paolo Greco 06:17 2025-05-16 UTC+2

GBP/USD Overview – May 16: The Market Has No Desire to Sell

The GBP/USD currency pair traded sideways on Thursday with low volatility—typical behavior for the pound over the past month. First, there was a classic flat range; now, we see "swings"
Paolo Greco 03:54 2025-05-16 UTC+2

EUR/USD Overview – May 16: The Dollar Remains the World's "Number One Currency"

The EUR/USD currency pair moved in both directions on Thursday but ultimately remained below the moving average line. Its position beneath the moving average allows us to expect further strengthening
Paolo Greco 03:54 2025-05-16 UTC+2

Are Things Really So Optimistic with the Deals with China and the UK?

Last week, Donald Trump announced the signing of the first deal with the United Kingdom under his "America's Liberation" campaign. It was later revealed that the deal had not been
Chin Zhao 00:40 2025-05-16 UTC+2

The Euro Didn't End Up in the Junkyard

Chinese goods have flooded the European market, but EUR/USD bulls aren't alarmed by this. While the U.S. has reduced tariffs on imports from China, the weighted average tariff still sits
Marek Petkovich 00:39 2025-05-16 UTC+2

Top analytics

Relevance up to 04:00 2025-05-21 UTC--4
Japan on the Brink of Recession
11:00 2025-05-16
Fundamental analysis
Relevance up to 11:00 2025-05-30 UTC--4
Trading Signals for EUR/USD for May 16-19, 2025: sell below 1.1230 (200 EMA - 6/8 Murray)
17:04 2025-05-16
Technical analysis
Relevance up to 11:00 2025-05-30 UTC--4
Trading Signals for GOLD for May 16-19, 2025: sell below $3,211 -3,226 (200 EMA - 21 SMA)
17:02 2025-05-16
Technical analysis
Relevance up to 06:00 2025-05-19 UTC--4
US Market News Digest for May 16
13:20 2025-05-16
News
Relevance up to 03:00 UTC--4
Market gets lost in crowd
11:40 2025-05-16
Fundamental analysis
Can't speak right now?
Ask your question in the chat.
Widget callback
Callback widget
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.