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

In this weeks copy:

Like how many more acronyms can I fit in here…..

It has been a while since I have seen an economic calendar so jam packed, this is only Wednesday onwards.

The most anticipated I suspect is the Bank of Japan, we have seen heavy buying pressure on JPY crosses last week ahead of this week’s meeting, where the BOJ are expected to raise rates finally. (More on this below)

Following on, we have FOMC releases this Wednesday evening; the market is not pricing any cuts for July, with talks of September cuts not expected to cause much of a shock either as the CME Fed watch tool already has fully priced this in, even though unconfirmed. With unemployment rising and consumer spending cooling, I see no reason as to why the Fed would pivot now.

The last of the central bank announcement this week comes from the BOE, where the concern over services inflation and slow wage growth may deter the bank from cutting rates, albeit a significant drop in headline inflation this year. My expectation is that the chances of large shocks on GBP remains high given the unknown.

Trading these announcement…

This week will be more difficult than others to trade, given the amount of news we have.

However, a top tip for trading these types of moves is to mark out clear liquidity points ahead of time, and expect a sweep and reverse (assuming the data is in sync with the move you are looking to take)

You can use candlestick charts for this too, however adding another layer of futures data is incredibly helpful to track orders via footprint and heat maps.

This is quite a straight forward way to trade red folder news, but more often than not easy liquidity will be taken if you wait until after the release.

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

The USD crosses are not solely dependant on DXY this week, albeit NFP week. With high Central Bank activity, GBPUSD & USDJPY could well make large moves without being highly correlated on DXY.

Technically, we have had a fake break below support at 103.90 and put in a retail inverted H&S pattern. Typically I see these patterns as vehicles for roping in retail traders, where passive sellers with absorb these buys.

Given that, I will await more clues on how to play the higher correlated DXY pairs such as EURUSD.

We have seen some heavy selling on JPY crosses in the last 7-10 days, offering little opportunity to catch a falling knife.

This comes as the BOJ policymakers announce tapering, but by how much remains to be seen. The next question is - will they hike rates too?

Following on from strong bullish surge in JPY, failure to raise rates or comments around the extent of their tapering, leaves significant room for disappointment in the short term, particularly as the market has given policymakers some breathing space over the last couple of weeks.

We may see some profit taking on JPY crosses if their announcements appear somewhat hawkish still.

As for a trade idea, we would need to see some pullbacks in the market to provide favourable entries and sensible stop loss placements.

Looking at GBPJPY, any bounce back towards 200 level will be of significant interest for shorts. For a swing trade I expect the overall narrative to continue on JPY, as Japan’s inflation is imported via weak currency transactions, and growth remains sluggish. I believe it’s only a matter of time and consider the JPY crosses to now be bearish.

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

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Have a great week everyone.