Welcome to Lost In The Exchange, the most detailed to the point FX newsletter that sets you up for the week ahead. In this weeks copy

After explosive moves on Friday afternoon (expected), we are taking a look at market sentiment and the coming weeks where markets could make a move to.

Last week’s copy here….. has played out perfectly with the trade ideas given, as did ‘trade of the week', in the form of GJ shorts (still pending a larger snap lower.

I fully expect a continuation of USD weakness this week however it will likely proceed a pullback first.

Fed Chair Powell set a dovish tone on Friday, opening the door on September rate cuts albeit a softening labour market in the US. Equities rallied to new highs as treasuries plummeted during a shit in positioning.

Concerns over tariffs remain high as they hold the ability to cause surges in inflation. In addition, the Fed does not want to be leading in global easing, extending the pressure on USD in the short term.

So okay - all well but how can we actually take advantage of this for the following weeks.

As we head into another data driven week, with PMI’s, FOMC, Unemployment claims and a speech from Fed head Powell, we take a look at entry points to continue the USD weakness expected to continue.

GBPUSD eyes up 1.3700

Looking for a correction in the market to fill some inefficiencies left behind from Friday’s impulse move. 1.3500 is a strong point of interest, and buy zone assuming bears don’t flush lower through here.

The R:R aligns well for a move higher on the back of continued USD weakness. The possibility of a deeper pullback still remains before any potential legs higher. However, for the idea to be valid, sentiment needs to remain the same in addition to Fridays range intact.

EURUSD aligning with cable

As expected with correlated markets - EURUSD is aligning very similarly to cable. I wouldn’t personally recommend or take positions on other pairs given such shallow pullbacks currently, in addition to low volume.

Large imbalances are sitting around 1.6500 as per the volume profile (spot market) from Friday, leaving the possibility of a deeper pullback open.

Trade ideas: (not financial advice) Personally I will not be taking positions at these levels, as I would prefer to trade a stronger level of support, in addition to seeing trapped sellers on the futures footprints.

For now sat on my hands waiting higher probability setups.

Trade of the week will be shared tomorrow in addition to this article, so keep eyes peeled for that.

Following the Jackson Hole meeting, attention now turns to unemployment claims and core PCE index readings this coming week.

Powell made it clear that the Fed’s focus has shifted, weakness in the job market is now just as important as inflation in shaping policy. If claims begin to trend higher, it strengthens the case for a September cut by confirming that the labor market is losing momentum.

A softer labor print would likely push bond yields lower, lift equities, and weigh on the dollar, while a surprisingly resilient reading could cool expectations for immediate easing.

At the same time, the core PCE index will give the clearest read on whether inflation is easing enough to allow the Fed breathing room. A subdued number would validate Powell’s dovish tone and reinforce bets on lower rates.

The biggest shock will come from if this week’s US data comes in hotter than expected, markets will have to reckon with the possibility that the Fed may not be able to cut as quickly as traders hope.

Without a doubt my favourite play upon the Frankfurt / London open, and in particular works well on GBPUSD.

As the market opens, we are looking for a fake pump in one direction, often cleaning the Asian range out and trapping in buyers or sellers depending on which side.

In addition to some key support levels (confirmed by TPO levels) and footprint charts to confirm the shift, this strategy has played out time and time again.

Take a look at the example below….

These are just examples from last week. However, once we refine this a little in deeper detail using more advanced tools like TPO profiles and footprint charts, we have a higher conviction play that I have personally traded for years…hence one of the favourite formations.

Feel free to comment on this post if you're keen to learn more about this - I will dive into the advanced patterns in another copy.

That’s all for this weekend and hopefully some of these ideas are useful for the week ahead. Currently there is no active channel or community where updates on ideas are posted.

I will be sharing my thoughts are the market develops via twitter once again. https://x.com/AaronSwney

Look out for unscheduled updates during the week.

All the best.