News and analysis

Hidden from hot rays of the investment sun beneath the canopy of huge mega cap trees, the previously dejected undergrowth of the broader class of temporarily unwanted assets has perked up noticeably in response to last night's unveiling of the Fed's more dovish policy outlines. I watched very closely since the beginning of this Fed-marked week on how the first buds tried to open even on hopes for further rate cut confirmations, and now I am ready to take a more proactive stance in some of those stocks in response to their rising green shoots and step-by-step flourishing. Fed' slashing rates are here to support most of those "not-being-loved-enough", or you can call them "previously emotionally abused", but still fundamentally strong businesses.

Applied Materials (AMAT), which I set initial price targets of around $175 for back in mid-July on its recovering fundamentals, surpassed that barrier by more than $3 already on Wednesday US morning before the Fed's announcement, adding more than 5% since the beginning of the week ahead of rate cut release. I'm sure, it will add an additional 5-7% in the next couple of days, following the same "rising undergrowth" agenda I just described here. For me, the next target for AMAT is well above $200.

Talking head Jerome Powell's routine remarks at yesterday's press conference a clearly updated macroeconomic projection by the Fed (with two more rate cuts welcomed by the majority of voting officials) could dampen initially dovish sentiment in the currency market to prompt some repositioning before the next wave of selling USD. However, this mentally manipulative trick for instantly taking profits in a number of currency pairs and then buying the USD back, with also buying time to think more, did not mislead the greedy crowd of equity investors, so that the S&P 500 index futures just ticked up to reach its new historical high above 6,650 points already on today's pre-market. If so, for now, I'm only talking about AMAT, but I hope to share my observations on several more Wall Street stocks soon, confirming their exposure to the fast-rising investment sun.

Basic Attention Token (BAT) is up 0.5% to $0.1601, underperforming Bitcoin (BTC), which gained 1.0% to $117,200. The broader crypto market is finding strong support after the Federal Reserve cut interest rates by 25 basis points on Wednesday and signalled two more reductions in 2025. Lower rates are a key tailwind for risk assets, helping digital currencies push higher.

BAT’s technical setup remains constructive. The token broke above the $0.1500 resistance in July with a 23.9% rally and has since held that level through August and September, showing resilience. With this base in place, BAT looks well-positioned for a potential 24% move higher toward the next resistance at $0.2000.

The bullish rally on Wall Street remains in progress, with the U.S. Dollar continuing to lose weight against the basket of rival reserve currencies. This happens with the clear understanding among the market community that the Federal Reserve's (Fed) decision today is essentially predetermined by the whole set of recent economic data. We are confident in the small first step reduction for the U.S. borrowing costs, from 4.25-4.50% to 4.00-4.25% on Wednesday.

The so-called Fed's "dual mandate" from the Congress includes only two goals, which are supporting maximum employment and stable prices. Weak U.S. jobs data of September 7, meaning only 22,000 new non-farm payrolls in August, and updates to the downside for the two previous months were well below average economists’ forecasts. Fed officials cannot remain inactive, as they need to cover their asses under those weakening conditions. Fed Chair Jerome Powell has already expressed their common concern about the U.S. labour market. But a sudden 0.4% MoM spike in the consumer price index (CPI) last week will help in justifying a small 25 bp slash instead of a larger 50 bp step down. In-line slice of the U.S. inflation pressure especially point to only a moderate rate cut by the Fed as the consumer inflation pace was much faster than 0.2% a month ago and also slightly above average forecasts of 0.3%. The annual inflation gauge came out at 2.9% for the last 12 months from September 2024 to August 2025, compared to 2.7% released in the previous month.

Weak jobs and persistent inflation are the two reactants that necessarily lead to a chemical reaction with a 0.25% rate cut in the sediment. The remaining space in the Fed decision vessel can be taken up by rhetorical water, which the markets are no longer of much interest to. Again, what the vast majority of the market expects from the Fed, the Fed always performs, so as not to rock the boat. The U.S. central banker's verdict couldn't be any different, because they are barely aimed at showing signs of panic like being ahead of entering recession. Indeed, any larger rate cut is relevant only in a near-recession scenario. Well, when this is highly likely confirmed by the Fed official statement in just a few hours, some minor technical volatility may take place on some stocks and major indexes, but no fundamental shake-ups or shake-downs are expected. After all, when the dust is settled, most market tools will continue to drive in the same direction they used to do it during the last several weeks.

The key role, therefore, is mentioned for the dot plot projections of the Federal Open Market Committee. As to the crowd's expectations, it should indicate two more interest rate cuts before the end of 2025. In fact, the same FedWatch tool demonstrates that 80% are expecting a second 0.25% slash at the end of October, and over 70% are betting on a potentially third rate cut move in mid-December as well. So, this so-far empty field in the Fed's statement seems pre-filled already, favouring the hand-rubbing bulls on Wall Street and the Dollar bears on major foreign exchange pairs.

If the Fed pledges two additional rate cut slashes on its dot plot for the remainder of 2025, then next and bigger objectives down to 92.50 for the U.S. Dollar Index (DX) vs the majors basket in for the next 4-6 weeks, will become quite realistic, with DX being traded at nearly 96.50 at the moment. Nearest target prices like 144 and even well below are possible for USDJPY in this scenario, as the slide of the Greenback against the Japanese currency has so far remained far behind the Dollar selling mood in US-European pairs like EURUSD, GBPUSD and USDCHF. Meanwhile, the prospects of 1.20 for the single currency or 1.40 for the Cable will depend mostly on the corresponding synchronous or asynchronous interest rate cuts by the European Central Bank and the Bank of England soon. Anyway, the door for the Greenback weakness would be wide open if the Fed becomes more dovish.

Meanwhile, the current rally in equity markets may be challenged by a very short-time correction, because of a "bought expectation, sold facts" scenario in some clearly overbought stocks. We expect that the Big Long mood will generally continue, as mid-caps are already supporting the AI flagships and other blue chips and may even further be encouraged with softening monetary conditions.

Synthetix (SNX) is down 4.0% to $0.665, trailing Bitcoin (BTC), which is edging higher by 0.38% to $116,500. The token has been locked in a sideways pattern since April, trading between $0.500 and $0.800, with the range tightening to $0.600–$0.750 over the past six weeks , a pattern mirrored across many altcoins. The Federal Reserve’s decision on Wednesday is expected to be the next catalyst. While a 25 bp cut is already priced in, dovish guidance could ignite momentum in the altcoin market. For SNX, the nearest resistance sits at $1.000, making it the likely first upside target.