Forex Market Today: Fed Hike Shakes Markets as BoE Faces Rising Inflation

Global markets are digesting the Federal Reserve’s first interest-rate increase since 2023 after policymakers delivered the widely expected 25-basis-point hike on Wednesday.

The Fed raised the federal funds target range from 3.50%–3.75% to 3.75%–4.00% in a unanimous decision.

But the biggest market reaction came from what happened after the announcement.

Updated Federal Reserve projections showed policymakers expecting rates to finish 2026 around 4.1%, suggesting that another increase could still arrive before the end of the year.

The Dollar responded aggressively.

The US Dollar Index pushed above the psychological 100.00 level and is trading around 100.30 in early Thursday trading, while EUR/USD has fallen below 1.1500 and USD/JPY has moved above 156.

Gold remains under pressure near the $4,270 region, while Bitcoin is struggling around $76,000.

Oil, however, has moved in the opposite direction. WTI has fallen toward $101 as additional Saudi crude supplies through Oman ease some immediate fears surrounding Middle East supply disruptions.

Today the focus shifts to the Bank of England, where policymakers must decide how to respond after UK inflation accelerated to 3.1%.

Federal Reserve Raises Rates for the First Time Since 2023

The Federal Reserve delivered exactly what markets had anticipated on Wednesday.

The Federal Open Market Committee voted unanimously to increase the federal funds target range by 25 basis points to 3.75%–4.00%.

The Fed said economic activity continues to expand at a solid pace while domestic spending remains resilient.

Most importantly, policymakers reiterated that inflation remains elevated.

That means yesterday’s increase may not necessarily represent the end of the tightening cycle.

The policy-rate projection is particularly important.

With the Fed’s new target range centered around 3.875%, a median year-end projection of 4.1% is consistent with approximately one additional 25-basis-point increase before the end of 2026.

The median projection also remains at 4.1% for the end of 2027.

That suggests Fed officials are not currently projecting a rapid reversal back toward lower interest rates.

Why Was the Fed So Hawkish?

The Federal Reserve entered Wednesday’s meeting with several reasons to remain concerned about inflation.

Last week’s CPI and PPI reports showed that underlying price pressures remain persistent.

Energy prices have also risen substantially because of Middle East supply disruptions.

At the same time, the US economy continues to show resilience.

August Retail Sales jumped 1.2% month-on-month, reversing July’s decline and easily beating market expectations.

That means the Fed is confronting a difficult combination:

Dollar Breaks Above 100 After Fed Rate Hike

The US Dollar was one of the clearest winners from Wednesday’s Federal Reserve announcement.

DXY surged through the psychological 100.00 level and climbed toward approximately 100.30 during Thursday’s Asian session.

The move represents a significant technical development after the Dollar spent several weeks below the 100 threshold.

The stronger Dollar reflects:

• A higher US policy rate
• Expectations for another Fed hike
• Elevated Treasury yields
• Strong US consumer spending
• Persistent US inflation

The immediate technical question is whether DXY can now turn 100.00 from resistance into support.

If it can, 100.50 and 101.00 become the next areas to monitor.

Bank of England Decision Takes Center Stage Today

With the Fed decision now behind us, attention shifts immediately to the Bank of England.

The BoE announces its latest policy decision today with Bank Rate currently at 3.75%.

The broad expectation is that policymakers will leave rates unchanged.

However, yesterday’s inflation report makes today’s decision considerably more interesting.

UK CPI accelerated to 3.1% year-on-year in August, up from 2.9% in July.

Monthly CPI increased 0.5%.

Transport costs — particularly motor fuels — made the largest upward contribution.

Producer inflation also accelerated.

• UK producer input prices: +6.1% YoY
• UK factory-gate prices: +3.7% YoY

That means the Bank of England is dealing with the same problem confronting several major central banks:

Energy-driven inflation is returning at a time when policymakers had hoped price pressures were moving steadily lower.

Three BoE Scenarios

Current Market Snapshot

The following are approximate early-session reference levels. Prices can vary between brokers, exchanges and futures contracts.

Support and Resistance Levels

Forex Market Analysis

EUR/USD Breaks Below 1.1500

EUR/USD has fallen toward 1.1460 following the Fed’s hawkish decision.

The move below 1.1500 is technically important.

Although the ECB raised rates last week, the Fed’s new policy projections have strengthened the Dollar side of the pair.

Immediate support sits around 1.1430 followed by the psychological 1.1400 level.

Bulls would need to recover above 1.1500 and 1.1550 to improve the short-term structure.

GBP/USD Awaits Bank of England

GBP/USD has fallen toward 1.3375 after the Dollar strengthened following yesterday’s Fed decision.

Today’s Bank of England announcement now becomes the main catalyst.

A hawkish BoE vote could trigger a recovery toward 1.3420 and 1.3480.

A dovish outcome could expose 1.3340 and potentially 1.3300.

USD/JPY Climbs Above 156

USD/JPY has pushed above 156.00 as higher US policy expectations widen the immediate yield advantage in favour of the Dollar.

However, traders should be extremely cautious about chasing the move.

The Bank of Japan concludes its policy meeting on Friday.

Any hawkish surprise from Japan could trigger a rapid reversal.

Resistance sits around 156.50 followed by 157.00.

AUD/USD

AUD/USD remains near 0.7100.

The Australian Dollar remains constrained by broad US Dollar strength and uncertainty surrounding Chinese demand.

A move below 0.7080 would place 0.7040 in focus.

NZD/USD

NZD/USD has slipped toward 0.5720.

Higher US rates and tighter global financial conditions continue to weigh on the Kiwi.

The psychological 0.5700 level is now important.

USD/CAD

USD/CAD is trading close to 1.3990.

Yesterday’s sharp drop in oil has reduced some of the support that elevated crude prices had been providing to the Canadian Dollar.

A sustained break through 1.4000 could strengthen the bullish structure.

USD/CHF

USD/CHF remains firm around 0.8260.

The US Dollar’s yield advantage continues to outweigh safe-haven demand for the Swiss Franc.

Resistance sits near 0.8290 followed by 0.8330.

Gold Price Outlook After the Fed Rate Hike

Gold remains under pressure around the $4,270 region.

The reaction is understandable.

Higher interest rates increase the opportunity cost of holding non-yielding bullion.

At the same time, DXY has climbed above 100 and Treasury yields remain close to historically elevated levels.

However, gold has not collapsed.

Geopolitical uncertainty, central-bank demand and safe-haven flows continue to provide underlying support.

The $4,250 region is now particularly important.

A sustained break below it could expose $4,200.

A recovery above $4,305 could shift attention back toward $4,350 and potentially $4,400.

Oil Falls as Saudi Supply Fears Ease

Oil has given back part of this week’s surge.

WTI is trading around $101.20, while Brent has fallen toward approximately $104.60.

The decline follows reports that Saudi Arabia is offering additional crude cargoes to Asian refiners using ship-to-ship transfers near Oman.

That has reduced some of the immediate concern surrounding damage to Saudi Arabia’s East-West pipeline.

Both WTI and Brent had already dropped by roughly $3 during Wednesday’s session.

However, the geopolitical situation remains far from resolved.

Traffic through the Strait of Hormuz remains constrained and energy infrastructure across the region remains vulnerable.

If oil continues moving lower, it could eventually provide some relief to global inflation expectations.

But any new disruption involving Hormuz, Saudi infrastructure or regional shipping could quickly reverse the move.

Bitcoin Holds Near $76K After Fed Hike

Bitcoin remains near $76,000 after initially falling following the Federal Reserve decision.

BTC has struggled to regain the $80,000 level during the recent rise in US yields.

Higher interest rates generally create tighter financial conditions and increase competition from yield-bearing assets.

However, the Fed is not the only factor influencing crypto markets.

Regulatory developments are also contributing to recent Bitcoin volatility.

For technical traders, $75,000 remains the first major support.

Below that, $72,500 becomes important.

On the upside, Bitcoin needs to recover above $77,500 before another serious attempt at $80,000.

Stock Market Reaction: Dow Falls More Than 600 Points

Wall Street initially handled the Fed rate hike relatively well.

But sentiment deteriorated as investors digested the possibility of further tightening.

The S&P 500 fell 0.4% to approximately 7,552.

The Dow Jones dropped 631 points, or 1.2%, to around 51,462.

The Nasdaq Composite was almost unchanged, while the Nasdaq 100 finished near 28,945.

The divergence shows that yesterday’s selloff was not simply a broad technology collapse.

Instead, investors were repricing the outlook for interest rates, banks, cyclicals, energy companies and future economic growth.

NASDAQ 100

The Nasdaq 100 remains near the 29,000 area.

Higher rates remain a valuation headwind, but resilience in major technology names limited Wednesday’s losses.

Support sits around 28,700–28,500.

A recovery above 29,100 could reopen 29,300.

S&P 500

The S&P 500 closed around 7,552.

The 7,500 level is now an important psychological and technical area.

A move below it could expose 7,450.

US30 / Dow

The Dow experienced the strongest major-index reaction following the Fed.

The index is now approaching support around 51,000.

A recovery above approximately 51,800 would be the first sign that selling pressure is stabilizing.

Bank of Japan Comes Next

After the Fed and Bank of England, traders will quickly turn toward Friday’s Bank of Japan decision.

That keeps USD/JPY exposed to unusually high event risk.

The Fed has just strengthened the Dollar’s yield advantage.

The BoJ now has an opportunity to narrow that gap if policymakers deliver tighter policy or stronger guidance.

That makes the 156–157 region especially important going into Friday.

Economic Calendar Today – Thursday, September 17

TraderFactor Trading Focus

Yesterday’s FOMC move significantly changed the short-term market structure across several major assets.

Today traders should watch whether markets continue the post-Fed move or begin retracing yesterday’s displacement.

DXY above 100 is especially important because the level may now act as a major liquidity and support zone.

Don’t Automatically Chase the Post-Fed Move

One of the biggest risks today is entering late after Wednesday’s large Dollar displacement.

The market has already repriced a significant amount of hawkish information.

If DXY sweeps liquidity above Wednesday’s high and then shows bearish displacement, a retracement could develop even while the broader fundamental backdrop remains Dollar-positive.

Similarly, EUR/USD or GBP/USD could sweep fresh lows before producing an intraday reversal.

Structure confirmation remains important.

Final Market Outlook

The Federal Reserve has now answered the first major question of the week.

Yes — rates are moving higher.

But the more important message from Wednesday was that the Fed may not be finished.

The median policy projection now points toward another potential increase before the end of 2026.

At the same time, Fed officials upgraded their growth expectations and lowered their unemployment forecast while projecting inflation to remain well above target.

That combination explains why the Dollar pushed above 100 and why Treasury yields remain elevated.

Today, however, attention moves to the Bank of England.

UK inflation has accelerated to 3.1%, energy costs remain a problem and producer inflation is increasing.

The BoE may therefore leave rates unchanged while maintaining a distinctly hawkish tone.

That could create significant volatility in GBP/USD.

Beyond today, the Bank of Japan decision on Friday means central-bank risk remains elevated for another session.

For traders, the key question has therefore changed.

The market is no longer asking whether the Fed will hike.

It is asking how far the new global tightening cycle could go.

Current Market Bias

Frequently Asked Questions