Welcome to Lost In The Exchange - The essential FX newsletter to keep you informed and prepared for the week ahead.

In this weeks copy:

Quite interestingly the market sentiment around a large rate cut had shifted quickly in the weeks leading up to the FOMC announcement. This was largely due to weak labour market data, encouraging the fed to be bold with a 50bp cut instead of the 25bp.

As the data was released, we seen the CME Fed watch tool shift in sentiment towards larger rate cuts, giving the USD an early dump in the days before the actual release.

Investors also got a look at the dot plot, which outlines the expected cutting cycle to come from each individual policy maker. The median path sees the Fed’s fund rate between 4.25% - 4.5%, substantially lower than the expectations from June.

Going forward rate cuts remain data dependant, but we should note that this bold cut is not necessarily a pre cursor for future cycles, but rather just a bold move to kick off.

What does this mean for the USD?

Well, signals to the market came early as the bold cut was priced in early. In general further weakness is expected across USD pairs, however, crucially DXY remains above the physiological level of 100, which bears will have a hard time crossing.

To stay informed with live updates, join our community where we will utilise TPO & futures data to find the highest probability setups.

French and German PMI’s kicking off the London session on Monday, however although we cant predict the outcome, from a technical perspective on EURUSD we have clear liquidity builds above current market price, therefore, even for traders who are bearish on EURO , we can expect this to be ran first before any major moves occur.


Technically I will be looking for some rallies early on EURUSD, to clean the highs before considering the next move. We could see some dips to the downside first, In which case I would extend the upside targets towards 1.1250, however if we tick higher into 1.1200 first without any manipulation to the downside, I will trade with caution for extended targets.

Looking at the TPO levels:

The daily TPO will open inside Fridays value area, suggesting rotation at least towards the other side of value on the upside, following that I expect a break of the highs.

Similarly on the weekly TPO, we will open the week around the VAH, with a single print right below, if we drop back inside value area, below the high vol node we the market runs the risk of a deeper pullback towards the POC before any extended rally’s.

Following on from this in GBP PMI, again we have no reason to believe this trend will reverse, as the BOE maintain rates and the US cuts begin, GBP is the most favourable currency in search of higher yields.

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In terms on trend trading, Gold is as clear as it gets. With global instability, tensions in the Middle East, and US recession fears, Gold continues on a one way path with investors taking every dip as an opportunity to buy.

With another strong weekly closure, I expect no less in the coming weeks than continued bullish momentum. A dip back towards $2530 region remained a possibility but we will take the momentum as it comes, as this area is now rather distant.

Key areas on interest I will be looking for dips into are $2580, $2590, but depending on price delivery in to these levels, and how the market behaves here.

Ultimately we need the FOMC lows to remain in tact to continue with this bullish outlook. This is something we monitor daily, as profit taking can spark fears of sharp sell offs sending the market into deeper pullback zones.

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Have a great week everyone.