Two more Fed rate cuts expected this year: FX

Two more Fed rate cuts expected this year: FX

The U.S. Federal Reserve (Fed) is expected to announce two more rate cuts this year, according to market expectations and recent economic data. This decision follows a series of economic indicators that have pointed towards a weakening economy, including a significant drop in the U.S. Services PMI to 50 in September, near pandemic lows .

The ISM Services PMI, which measures the activity in the service sector, fell to 50, indicating a contraction in business activity. This unexpected decline has reinforced the growing odds of near-term Fed rate cuts. Additionally, the Business Activity index fell to 49.9, the lowest since 2020, and the New Orders index weakened sharply, showing that service-sector growth is stalling .

The Fed's decision to cut rates is also influenced by the U.S. labor market data and inflation rates. The labor market has shown signs of weakness, with core PCE inflation still running at 2.9%, the first such level in 30 years. These factors have increased the likelihood of Fed rate cuts, with markets now expecting at least two cuts beginning as soon as the October FOMC meeting, with one more possible before the end of 2025 .

The contraction of the Fed's balance sheet from its pandemic-era peak has also contributed to this expectation. The balance sheet has shrunk by approximately $2.3 trillion since 2022, leading to a shift in monetary policy from quantitative tightening (QT) to a possible easing bias. This change in policy is seen as a potential catalyst for risk assets, including Bitcoin, which has rallied to a 50-day high of $123,841, gaining over 11% in October .

Moreover, there are reports of President Trump considering new stimulus checks of $1,000–$2,000 funded through tariff revenues. Such fiscal stimulus could add another powerful liquidity injection into markets already preparing for Fed easing, potentially accelerating Bitcoin’s trajectory towards $150K and beyond .

The technical picture for Bitcoin also supports the bullish narrative. Bitcoin's structure now mirrors past "price discovery" phases, with strong ETF inflows, record open interest, resilient spot demand, and aggressive futures buying. Analysts argue that Bitcoin may be entering Price Discovery Uptrend 3, historically the stage where mega bull runs take shape .

As long as Bitcoin holds above $120K and the Fed follows through with rate cuts, the setup favors upside continuation. The recent move saw Bitcoin decisively break above the $112K downtrend resistance, setting the stage for continuation higher. With these technical confirmations lining up, the probability of Bitcoin reaching $150K this quarter looks increasingly realistic .

In conclusion, the expected two more Fed rate cuts this year are driven by a combination of economic indicators, labor market data, and inflation rates. These cuts are expected to support risk assets and potentially drive Bitcoin's price towards $150K.