Forex News

• USD/CAD rises to a six-week peak, testing 1.4000, a 0.51% rise on the Fed
• Canada's rate has not moved in seven meetings while the Fed's just did
• Pair clears its 50-day and 200-day averages, both clustered near 1.3900

The Loonie trades at its weakest since early August, with USD/CAD just under 1.4000 after a 71-pip rise and a 0.51% gain. The Fed raised its rate a quarter-point to 3.75-4.00% and the Bank of Canada did not, which takes the distance between them from 1.375 points to 1.625. That is most of the story. A currency that sells oil at more than $100 a barrel lost ground anyway.

One of them moved, and it was not the near one

The Bank of Canada (BoC) has held its overnight rate at 2.25% through seven consecutive meetings, the most recent on September 2, and does not decide again until October 28. American money now pays 1.625 points more than Canadian money overnight, where this morning it paid 1.375 more. The Fed's projections widen that further on paper, carrying the American rate to 4.1% by December and holding it there through 2027, while Canada's own market prices no change at all before the year is out. The Bank of Canada spent this afternoon publishing its account of the September 2 decision, thirty minutes before the Fed made a different one.

Oil did not save it

The barrel above $100 normally lifts this currency, and on any other afternoon it would have. The rate gap moved today and the barrel did not. The chair supplied the rest, describing a committee that still needs to see underlying inflation heading to 2% clearly and quickly and does not yet, which is a central bank with more to do. Canada's has nothing scheduled for six weeks.

Levels and bias

Resistance: 1.4000 is directly overhead and today's high stopped ten pips beneath it. Above that sit 1.4050 and 1.4100.

Support: The 50-day and 200-day Exponential Moving Averages (EMA) are clustered near 1.3900, about 70 pips below the market, and the pair opened on top of them this morning. Beneath that cluster, 1.3850.

Bias: Bullish while the average cluster near 1.3900 holds, with 1.4000 the first objective and 1.4050 behind it. The Stochastic Relative Strength Index (Stoch RSI), the daily momentum gauge, is up at 81 at the top of its range, so the move is stretched and a pullback toward 1.3950 would not change the reading. A daily close back below 1.3850 voids the case.

USD/CAD 5-minute chart

• DJIA drops 576 points to just above 51,500 as the Fed raises rates
• Fed goes to 3.75-4.00% with no dissent, its first increase since 2023
• Fifth straight fall on a Fed decision day, averaging 1.5% each time

The Dow Jones Industrial Average trades just above 51,500, down 576 points and 1.11%, its worst session of the month. The Federal Reserve (Fed) raised its rate a quarter-point to 3.75-4.00%, which everyone had priced, and the index spent the two hours afterward finding out what came with it. The broad market has now fallen on five consecutive Fed decision days this year, losing an average of 1.5% each time, which is the longest such run since a stretch of seven that ended in 2018.

A quarter-point on overnight money, thirty ways

The rate the Fed sets is what banks pay to borrow from each other overnight, and it reaches this index in two directions. It lifts what the 30 companies pay on floating-rate debt, and it widens what JPMorgan (JPM) and Goldman Sachs (GS) earn on the gap between their lending and their deposits. Those two partly cancel. What does not cancel is the forecast, because the committee's own numbers now put the rate at 4.1% at the end of this year and 4.1% again at the end of next, with four of the eighteen seeing any reduction by then. Thirty borrowers have just had next year's interest bill rewritten upward.

The Chair said the test has not been met

At the press conference, Fed Chair Warsh set out a test: the committee has to be confident that underlying inflation is heading to 2% clearly and fast enough, and today it judged that test unmet. The summer's inflation numbers, he said, do not show the underlying trend getting better. Against that he described an economy running more or less at full employment, with productivity strong and capital investment robust. That combination is the awkward part for an equity index. The case for the companies is also the case for charging them more.

Levels and bias

Resistance: The 51,750 area is the first thing overhead, and 52,000 sits above it, the level the index held through the morning. The 50-day Exponential Moving Average (EMA) near 52,700 has capped every attempt since the start of September.

Support: Today's low just under 51,500 is the floor. Below it, the late-June base near 51,300 is the next stop and the lowest the index has traded in three months.

Bias: Bearish while 52,000 caps, with the late-June base near 51,300 the first objective and 51,000 behind it. The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, points down from near 32, so the selling is not exhausted. A daily close back above 52,250 voids the case.

Dow Jones 5-minute chart

• Silver trades under pressure as the US Dollar strengthens after the Fed decision.
• The Fed raises rates by 25 basis points and signals that additional tightening is likely.
• Technically, XAG/USD maintains a bearish bias below the 100-day and 200-day SMAs, while the 50-day SMA acts as immediate support.

Silver (XAG/USD) trades under pressure on Wednesday as a stronger US Dollar and rising US Treasury yields weigh on the non-yielding metal following the Federal Reserve’s (Fed) monetary policy decision. At the time of writing, XAG/USD trades around $62.68, down 1.56% on the day.

The Fed raises the federal funds target range by 25 basis points to 3.75%-4.00% in a unanimous 12-0 decision. In its statement, the central bank says economic activity is expanding at a solid pace, domestic spending remains resilient and unemployment has changed little. Policymakers add that inflation remains elevated and that the rate increase will help bring inflation back to the 2% target sooner.

The US Dollar Index (DXY) advances above the psychological 100.00 mark, while the benchmark 10-year US Treasury yield rebounds toward 5.00%.

Higher interest rates and rising bond yields typically weigh on Silver by increasing the appeal of interest-bearing assets. However, the metal’s decline remains limited as the quarter-point hike was widely expected.

Fed Chairman Kevin Warsh also strikes a hawkish tone, saying inflation remains too high and that the economy is strong enough for policymakers to focus on price stability, while describing the labour side of the Fed’s mandate as “in good shape.”

Technical Analysis

On the daily chart, the near-term bias leans bearish as price holds above the 50-day Simple Moving Average (SMA) at $62 but remains well below the 100-day and 200-day SMAs at $66 and $73, respectively, suggesting rallies are still capped by the broader downtrend. The Relative Strength Index (RSI) near 45 and a negative Moving Average Convergence Divergence (MACD) reading with red histogram bars hint at soft momentum and a lack of strong directional conviction.

On the downside, initial support is seen near the 50-day SMA at $62, with further cushions at the psychological $60.00 level and then $55 if selling pressure accelerates. On the topside, a recovery toward the 100-day SMA at $66 would face notable resistance, while any extension beyond that level would bring the 200-day SMA at $73 into focus as a stronger medium-term barrier.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

The US Dollar (USD) has navigated a positive range on Wednesday, gathering extra pace after the Federal Reserve (Fed) hiked its Fed Funds Target Rate (FFTR) by a quarter percentage point, as widely anticipated.

Here is what you need to know on Thursday, September 17:

The US Dollar Index (DXY) has managed to reclaim the psychological 100.00 barrier and beyond as investors assessed the Fed’s decision to raise rates to 3.75%-4.00%. The usual Initial Jobless Claims take centre stage, seconded by Housing Starts, Building Permits, Pending Home Sales and the Philly Fed Manufacturing Index.

EUR/USD has dropped below the 1.1500 contention zone to hit fresh multi-week troughs on the back of the solid performance of the US Dollar post-Fed decision. The final Inflation Rate in the Eurozone is due alongside a speech by the ECB’s Lane.

Further Greenback strength dragged GBP/USD back below the 1.3400 level for the first time since late July, retreating for the third day in a row. The BoE is expected to keep its bank rate unchanged at its upcoming meeting on Thursday.

USD/JPY has added to the weekly rebound, advancing to levels just shy of the 156.00 yardstick, or multi-day peaks. The usual weekly Foreign Bond Investment figures are due.

AUD/USD has weakened further, receding to the area of four-week lows after breaching below the 0.7100 support level. Next on tap in Oz will be the release of the preliminary PMIs on September 23.

WTI has faded Tuesday’s strong advance, receding to the $101.00 region on the back of the firmer US Dollar and absence of news on the geopolitical front.

Gold has surrendered its initial gains and charted its third day in a row of losses, receding to the $4,250 zone per troy ounce, or six-week troughs, following the marked uptick in the Greenback and mixed US Treasury yields across the curve.

Federal Reserve (Fed) Chair Kevin Warsh is holding a press conference following the Federal Open Market Committee (FOMC) decision to raise the Funds Target Range to 3.75%–4.00%, as expected. Chair Warsh sounds quite hawkish, and his remarks reflect his concerns about stubbornly high inflation and, hence, justify the decision. Among other things, he noted that inflation trends were not passing the test, and that he had seen little to change that.

Key Warsh comments:

"I am hard-pressed to call financial conditions restrictive.
The view that conditions are not restrictive was widely shared by the FOMC.
The FOMC removed a dose of accommodation.
The summer data does not tell me that the inflation situation has improved.
We must be confident that underlying inflation must be moving to 2% on a timely basis, and the FOMC decided this has not been met."

His words pushed the US Dollar Index (DXY) above 100.00 as market participants rushed to bet on two more Fed rate hikes by year-end.

The Federal Reserve's (Fed) latest dot plot projections, released by the Federal Open Market Committee (FOMC) on Wednesday, show policymakers now expect interest rates to stand at 4.1% by the end of 2026, up from 3.8% in June. The projection is above the current midpoint of the target range, signaling that officials expect one more rate hike this year after raising rates to 3.75%-4.00% on Wednesday.

For 2027, officials project the federal funds rate at 4.1%, higher than the 3.6% estimate published in June. The rate is expected to ease to 3.9% in 2028, also above the previous 3.4% projection. The longer-run rate rises to 3.2% from the previous 3.1%.

The Fed also revised its economic projections. The US Gross Domestic Product (GDP) is now projected at 2.3% this year, up from the previous forecast of 2.2%. For 2027, the US economy is expected to grow by 2.4%, up from the previous estimates of 2.3%.

The unemployment rate is expected to be at 4.1% by the end of 2026, down from the previously estimated 4.3%. The jobless rate is projected to remain at 4.1% in 2027, below June projections of 4.3%.

Finally, the Personal Consumption Expenditures (PCE) inflation is estimated to rise by 3.7% by the end of 2026, slightly above the 3.6% projected in June. In 2027, PCE inflation is projected at 2.3%, matching June projections.

• AUD/USD drops over 20 pips in the immediate reaction to the Fed decision.
• The Fed raises rates by 25 basis points and signals that more tightening is likely.
• The US Dollar Index extends its advance toward the psychological 100.00 mark.

AUD/USD extends losses on Wednesday after the Federal Reserve (Fed) raised interest rates and released a hawkish set of policy projections. The pair slides more than 20 pips in the immediate reaction and trades around 0.7093 at the time of writing.

The Fed raised the federal funds target range by 25 basis points to 3.75%-4.00% in a unanimous 12-0 decision, marking its first rate increase since July 2023. The US Dollar Index (DXY) extends its gains above the psychological 100.00 mark following the announcement.

Speaking after the decision, Fed Chairman Kevin Warsh said, “Inflation is too high, and has been for too long.” He added, “Because of the underlying strength of the economy, we can afford to focus on price stability.” “We must be confident that underlying inflation must be moving to 2% on a timely basis, and the FOMC decided this has not been met,” Warsh said. He noted that inflation risks are tilted to the upside, while risks to the labor market are balanced.

The updated dot plot shows that 16 of 18 Fed officials expect at least one more rate hike this year. Twelve policymakers project one additional quarter-point increase, four expect two more hikes and two see no further moves.

The median year-end rate projection rose to 4.1% from 3.8% in June. The 2027 projection also climbed to 4.1% from 3.6%. The Fed raised its 2026 GDP growth forecast to 2.3% from 2.2% in June and lifted its headline PCE inflation projection to 3.7% from 3.6%. The core PCE inflation forecast also increased to 3.4% from 3.3%, while the Unemployment Rate projection fell to 4.1% from 4.3%.

At the post-meeting press conference, Fed Chair Kevin Warsh explained why policymakers decided to raise interest rates after the September meeting and took questions from reporters about the decision.

Warsh’s press conference highlights

The FOMC decided to raise rates by a quarter point.

Inflation remains elevated.

The decision comes as the economy appears to be strengthening.

Key markers have improved in recent months.

The view that conditions are not restrictive was widely shared by the FOMC.

The economy is resilient.

The jobless rate remains low, while openings and hours are increasing.

The labour side of the Fed’s remit is in good shape.

Our predominant focus is inflation.

The plain fact is that inflation is too high and has been for too long.

The summer data do not tell me that the inflation situation has improved.

Too many categories are posting increases above 3% on both a 6- and 12-month basis.

In July, we expressed joint readiness to act.

We must be confident that underlying inflation is moving to 2% on a timely basis; the FOMC decided that this has not been met.

I did not submit a dot.

The Fed has a role in sustaining the economic progress occurring right now.

Those less well-off have the most to gain from that.

The decision made today was a sober decision.

I am not going to prejudge any future decision we may make.

Today was our decision.

I have nothing for you about any discussion with the President.

Today’s decision was the right decision.

Because of the underlying strength of the economy, we can afford to focus on price stability.

In the seven weeks since we last met, the data have shown that the economy has strengthened.

Inflation trends were not passing the test, and we saw little to change that.

My colleagues are hard-pressed to describe financial conditions as restrictive.

We decided to remove a dose of accommodation.

I have always been interested in the neutral rate academically, but I do not see it having an operational effect on today’s decisions.

I was not waiting breathlessly for any one data point.

Trends matter; data points are noisy.

I do not have anything for you on discussions with the President.

Independence is a two-way street; we must stay in our lane.

In aggregate, we are more or less at full employment.

Stable prices offer good news to workers by allowing them to see real take-home pay increases.

This section below was published at 18:00 GMT to cover the Federal Reserve's policy decisions and the immediate market reaction.

At its September meeting, the Federal Reserve (Fed) raised its Fed Funds Target Range (FFTR) by 25 basis points to 3.75%–4.00%, right in line with what markets were expecting.

Highlights from the FOMC statement

The Federal Reserve raises its key overnight interest rate by 25 basis points to a 3.75%-4.00% range, saying the action will support a timelier return to its 2% inflation goal.

Economic activity is expanding at a solid pace.

Inflation remains elevated; the Fed drops its earlier description that this was owing in part to supply shocks.

Domestic spending has been resilient despite elevated uncertainty.

Job gains have kept pace with the workforce, and the unemployment rate has changed little.

Productivity growth is strong, and capital investment is robust.

The Committee will deliver price stability.

The vote in favour of the policy was unanimous.

Key takeaways from the Summary of Economic Projections (SEP)

Officials’ median view of the Fed funds rate at end-2026 is 4.1% (prev 3.8%).

Officials’ median view of the Fed funds rate at end-2027 is 4.1% (prev 3.6%).

Officials’ median view of the Fed funds rate at end-2028 is 3.9% (prev 3.4%).

Officials’ median view of the Fed funds rate at end-2029 is 3.6%.

Fed projections show 12 of 18 officials see one more 25-basis-point rate hike this year; four see two hikes; two see no more hikes.

Officials’ median view of the Fed funds rate in the longer run is 3.2% (prev 3.1%).

Fed policymakers see a 4.1% unemployment rate at end-2026 versus 4.3% in the June projections.

Fed policymakers see end-2026 PCE inflation at 3.7% versus 3.6% in June; core inflation is seen at 3.4% versus 3.3%.

Fed policymakers see 2.3% GDP growth in 2026 versus 2.2% in June, and longer-run growth at 2.0% versus 2.0% in June.

Market reaction to Fed policy announcements

The US Dollar (USD) keeps pushing higher on Wednesday, with the US Dollar Index (DXY) gathering extra pace and approaching the psychological 100.00 hurdle following the Fed’s decision to hike rates.

This section below was published at 14:00 GMT as a preview of the Federal Reserve's policy announcements.

• The US Federal Reserve is widely expected to raise the interest rate by 25 basis points. 
• The revised Summary of Economic Projections will provide key clues on the monetary policy outlook.
• The US Dollar is set to experience heightened volatility during Fed Chair Warsh’s press conference.

The United States (US) Federal Reserve (Fed) announces its interest rate decision on Wednesday, following another pivotal meeting that could provide key insights into the monetary policy outlook heading into the end of the year.

Markets widely expect the Federal Open Market Committee (FOMC) to raise the policy rate by 25 basis points (bps) to the range of 3.75%-4% after opting to leave it unchanged in the previous five consecutive meetings.

This decision is almost fully priced in, with the CME FedWatch Tool pointing to about only a 7.5% chance of another policy hold. Hence, the revised Summary of Economic Projections (SEP) and Fed Chair Kevin Warsh’s comments in the post-meeting press conference could offer important clues on the rate outlook and drive the US Dollar’s (USD) valuation.

Earlier in the month, Fed Governor Christopher Waller said that he would be inclined to support a policy hold if August inflation data were to confirm that inflation pressures were cooling. The US Bureau of Labor Statistics (BLS) reported on Friday that the annual inflation, as measured by the change in the Consumer Price Index (CPI), held steady at 3.4% in August, showing no progress. According to the other details of the report, the core CPI, which excludes volatile food and energy prices, rose by 0.3% on a monthly basis, coming in above the market expectation of 0.2%. These inflation figures, combined with the impressive August labor market report, which recorded an increase of 162K in Nonfarm Payrolls, reaffirmed a monetary policy tightening step in September.

Analysts at MUFG/BTMU note that, following the stronger US inflation data, markets now expect the Fed to “begin their tightening cycle as soon as this week,” with “22bps of hikes priced in for this week’s FOMC meeting compared to around 15bps a week ago.” 

They add that “while it is not a done deal that the Fed will begin hiking rates this week, it would be big surprise for the Fed to leave rates on hold after recent communication.” In their view, “a decision to leave rates on hold would also threaten to undermine the Fed’s policy credibility amidst building concerns over upside inflation risks from rising energy prices.” They highlight that “the price of Brent is currently trading at just over 50% higher than pre-conflict levels,” and caution that “there is little optimism that energy supplies from the Middle East will normalize quickly.”

When will the Fed announce its interest rate decision and how could it affect EUR/USD?

The Fed is scheduled to announce its interest rate decision and publish the monetary policy statement, along withe the revised SEP, at 18:00 GMT. This will be followed by Fed Chair Kevin Warsh’s press conference starting at 18:30 GMT. 

In June, the dot plot, the component of the SEP that shows policymakers’ interest rate forecasts, highlighted that policymakers’ projections implied only a 25 bps increase in 2026, followed by a 25 bps rate cut in 2027 and another 25 bps cut in 2028.

At this juncture, a decision to leave the interest rate unchanged could be seen as a significant dovish surprise and weigh heavily on the USD and US Treasury bond yields as the initial reaction. Even if the dot plot points to a rate hike at the end of the year or a hawkish tilt in next year’s projections, a policy hold at this meeting could cause the Fed to lose its credibility, suggesting that the US central bank might be under political pressure not to tighten policy ahead of the midterm election. In this scenario, EUR/USD could gather bullish momentum.

In case the Fed raises the interest rate by 25 bps as anticipated, and the dot plot highlights one more increase this year and at least another hike next year, the USD could gather strength in the near term and trigger a sharp decline in EUR/USD. Such an outcome could help convince investors that the Fed will not be influenced by politics and do whatever is necessary to achieve price stability. According to the CME FedWatch Tool, markets currently see about a 75% probability that the Fed will hike rates at least twice by the end of the year, suggesting that there is room on the upside for the USD if one more tightening step in December is confirmed.

Economists at ING note that the data backdrop has softened since the Fed’s last forecast update, pointing to “a weaker than expected 2Q GDP report” and “a softer trend in job creation, notwithstanding the August surprise,” while inflation has shown “some encouraging signs of decelerating, even if the year-on-year rate remains above 2%.” They “continue to argue that weak wage growth, tariff refunds and a stagnant housing market, which will slow shelter inflation, will all contribute towards a convergence on the 2% inflation target next year,” although they flag that “the risk is energy prices.”

Against this backdrop, ING expects only modest changes to the Fed’s projections. “In general though, we expect the Fed to project slightly lower inflation than they had in their June forecast while the GDP and labour metrics are little changed.” On rates, they look for the Fed to maintain a relatively elevated near-term profile, stating: “We expect them to have 4% as their end 2026 and end 2027 Fed funds forecast before it heads to their previous long-run projection for the Fed funds rate of 3.1%.”

Brown Brothers Harriman’s Elias Haddad argues that the upcoming FOMC decision will be pivotal for the USD, with the tone of the meeting likely to matter as much as the rate move itself. BBH outlines a clear “hawkish scenario: a unanimous or near-unanimous vote for a hike, dots that align with markets, and/or Warsh signaling more tightening would lift USD.”

By contrast, the bank cautions that a “dovish scenario: a split vote for a hike, dots below market pricing and/or Warsh framing the hike as insurance against inflation rather than the start of a sustained tightening cycle would weaken USD.” Despite the prospect of further tightening being priced into futures, BBH stresses that “the US economy does not warrant an aggressive tightening cycle. The slowdown in wage growth is disinflationary, and Fed policy is already somewhat restrictive against a nominal neutral rate of around 3.00%.”

Valeria Bednarik, FXStreet Chief Analyst, provides a short-term technical outlook for EUR/USD:

“EUR/USD trades near a fresh one-month low set on Monday at 1.1523, as investors priced in a rate hike. The overall picture is bearish, as the pair trades below all its moving averages on the daily chart after repeatedly failing to overcome the 200-day SMA since late August. The 100-day SMA at around 1.1550 provides immediate resistance ahead of the mentioned 200-day SMA at 1.1630.”

Bednarik adds: “The same chart shows technical indicators consolidating below their midlines, reflecting the ongoing pause ahead of the announcement rather than signaling downward exhaustion. The expected rate hike should push the USD higher, although the EUR/USD slide could be limited, as market players have already priced it in ahead of the announcement. A strong static support area comes at 1.1470, ahead of the 1.1400 threshold. A surprise on-hold decision, on the other hand, could put strong pressure on the Greenback and result in EUR/USD shooting beyond the aforementioned resistance levels and near the 1.1700 mark."

• EUR/USD breaks 1.1500 after the Fed decision, 58 pips off the day's high
• The ECB raised its own deposit rate a quarter-point to 2.50% six days ago

The European Central Bank (ECB) moved first. Six days ago it raised its deposit rate, the return banks earn on money parked with it, by a quarter-point to 2.50%. The Fed matched that size on Wednesday and went to 3.75-4.00%, its first increase since 2023. So both sides of this pair repriced inside a week. At the midpoint of its new range, the Fed pays 3.875% against the ECB's 2.50%, a distance of 1.375 points. Not one of the twelve voted against.

The statement said nothing about the path. The forecasts released beside it carry the American rate to 4.1% by December and keep it there through 2027, which is one more increase and no reductions. The gap itself is exactly where it sat before either of them moved.

Thirty-one pips went in the decision bar alone, and the selling carried on after it. Another 16 have gone since, putting the pair just under 1.1500 at the low of the day and roughly 34 pips under where it traded before the release. The high just above 1.1550 dates from the European morning and is now 58 pips overhead, which is the whole of the session's range. Intraday momentum has not caught the move, reading 44 and mid-range, because the fall came in two steps with a pause between them.

EUR/USD 5-minute chart

• WTI holds near its daily low after showing little reaction to the Federal Reserve’s rate increase.
• The Fed raises rates by 25 basis points, while the dot plot points to another hike this year.
• Saudi pipeline recovery hopes weigh on prices, although Middle East supply risks keep a geopolitical premium in place.

Texas Intermediate (WTI) Oil holds near its daily low on Wednesday, showing little immediate reaction to the Federal Reserve’s (Fed) monetary policy announcement. At the time of writing, WTI trades around $97.50 per barrel, down roughly 3.3% on the day.

The Fed raised the federal funds target range by 25 basis points to 3.75%-4.00% in a unanimous decision. The updated dot plot placed the median year-end rate at 4.1%, indicating that policymakers expect one more quarter-point increase this year.

Oil prices barely moved following the announcement as the rate hike was already priced in. Still, higher borrowing costs and a stronger US Dollar could weigh on economic activity and future energy demand.

Meanwhile, the market remains focused on Middle East supply risks, which continue to keep a sizeable geopolitical premium embedded in Oil prices. Shipping through the Strait of Hormuz remains heavily restricted, while security concerns around the Red Sea and the Bab el-Mandeb Strait add to the uncertainty.

Some positive news on the supply side helped drive Oil prices lower on Wednesday. Saudi Aramco is reportedly working to partially restore its East-West pipeline within days after last week’s drone attack. The route allows Saudi Oil exports to bypass the Strait of Hormuz.