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- The week in FX and Crypto: September 23, 2025
The week in FX and Crypto: September 23, 2025
Real-World Trading Insight. No Hype, Just Edge.
mark schaefer
September 23, 2025
In This Issue:
Market structure observations delivered 360 net points
FOMC positioning analysis: Reading the crowd before data releases
Week ahead
This week's market structure observations delivered 360 net points from flagged levels. Wednesday's FOMC provided the perfect case study for reading market positioning before major announcements.
The market widely expected a rate cut by the end of the week before Wednesday's FOMC announcement. As such, USD Index had traded in roughly the same 1% range for the previous six weeks. Then in the two days before the FOMC, USD suddenly dropped 1% to new multi-month lows.
This price action didn't make sense. Even if the Fed delivered a super dovish message, the move seemed excessive given that rate cuts were already priced in. The positioning felt stretched - too many people leaning the same direction after weeks of range-bound action.
Thirty minutes before the announcement, I tweeted that the USD move would likely reverse higher because people were "leaning into the rate cut picture too much."
This Week's Market Structure Analysis:
• GBP/AUD: +100 points (retest of channel resistance delivered as expected)
• ETH: +171 points (bearish reversal structure held)
• EUR/USD: +121 pips (FOMC positioning analysis)
• USD/JPY: -32 pips (reversal pattern negated)
Net: +360 points/pips
Note: These measure market reactions from flagged levels, not trading results. Implementation varies by individual approach.
The Positioning vs Fundamentals Framework
Wednesday's FOMC provided the perfect example of a concept that applies to all major data releases. Most traders focus on either fundamentals OR positioning, but the edge comes from reading the relationship between them.
The Framework:
1. Read the fundamentals - What does everyone know? (Rate cuts expected)
2. Assess the positioning - How crowded is the trade? (6 weeks range-bound, then sudden 1% drop)
3. Identify the imbalance - Is positioning ahead of fundamentals? (USD weakness overdone relative to known information)
4. Time the opportunity - The bigger the imbalance, the bigger the eventual move
This framework works because it's usually like this around big data releases. The more unbalanced the relationship between positioning and fundamentals, the higher the volatility and the size of moves.
In Wednesday's case: Everyone knew about potential rate cuts (fundamentals), but positioning had gotten stretched with the sudden 1% USD drop after six weeks of range-bound action. The imbalance was clear - too many people positioned for something already known.
The key insight: When fundamentals are widely known but positioning keeps getting more extreme, that's when reversals happen. The FOMC announcement itself was just the catalyst for the positioning unwind that was already overdue.
You can apply this framework to any major data release. Look for periods where positioning gets increasingly one-sided despite the fundamental information being already known. Those create the highest-probability reversal opportunities.
Week Ahead
Key levels for the week ahead:
GBP/AUD: Price continues to respect the channel resistance at 2.0480-90. Until we see a daily close back within the channel, price structure remains bearish.
EUR/USD: Resistance zone 1.1820-30. Still vulnerable to downside. Key Fibonacci support levels: 1.1718 (38.2%), 1.1653 (50%), then 1.1591 (61.8% Fib).
BTC: Momentum has turned down from overbought. Potential to test old lows around 107,300
ETH: Still room to move lower. Lower Bollinger band (4,159) first support, then psychological level at 4,000
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Meridian Compass is brought to you by Mark Schaefer, a quantitative portfolio manager with over 30 years experience developing and trading systematic strategies in global futures and FX at major banks and hedge funds.
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