Daily Market Report
09/17/2026
EUR/USD ranged in the high 1.14’s to the low 1.15s overnight. The Euro (EUR) consolidates losses at one-and-a-half-month lows on Thursday, with the US Dollar (USD) still buoyed by the hawkish message sent by the Federal Reserve (Fed) after Wednesday’s monetary policy meeting. The EUR/USD pair is trading practically flat at the 1.1475 level, after depreciating more than 1% so far this week.
The Fed hiked rates by a quarter-point for the first time in three years on Wednesday, meeting market expectations, but the hawkish tone shown by Chairman Kevin Warsh, whose distaste for forward guidance is notorious, came as an absolute surprise.
Warsh affirmed during the press release that “inflation remains elevated” and that the “economy appears to be strengthening,” which markets interpreted as a clear sign that further rate hikes are in the pipeline. These comments restored confidence in the central bank’s independence while boosting hopes of further rate hikes later this year, which sent the US Dollar rallying against its main peers.
The GBP/USD pair stages a modest recovery from its lowest level since July 30, around the 1.3375-1.3370 region touched earlier this Thursday, and, for now, seems to have snapped a three-day losing streak. Spot prices, however, capitalize on the momentum beyond the 1.3400 mark as traders seem hesitant ahead of the Bank of England (BoE) policy update.
The UK central bank will announce its decision later today and is widely expected to keep interest rates steady, suggesting that the focus will be on the MPC vote distribution and forward guidance. Market players are currently pricing in at least one 25-basis-points (bps) rate hike by the BoE in 2026 amid inflation risks stemming from higher energy prices. Hence, the outlook will play a key role in influencing the British Pound (GBP) and provide a fresh impetus to the GBP/USD pair.
Meanwhile, a modest pullback in US Treasury bond yields triggers some US Dollar (USD) profit-taking, which, in turn, is seen supporting the currency pair heading into the key central bank event. However, the US Federal Reserve’s (Fed) hawkish tilt and escalating Middle East tensions continue to act as a tailwind for the safe-haven USD, capping the GBP/USD pair. In fact, the US central bank raised rates for the first time since 2023 at the conclusion of the September meeting on Wednesday.
USD/JPY depreciates after three days of gains, trading around 155.80 during the European session on Thursday. The pair loses ground as the Japanese Yen (JPY) advances on market expectations of a 25-basis-point interest rate hike by the Bank of Japan (BoJ) on Friday.
Japanese officials offered cautious remarks on Thursday, with Economy Minister Minoru Kiuchi stating that the government aims to balance economic strength with fiscal sustainability, though he declined to comment directly on interest rates. Finance Minister Satsuki Katayama noted that officials will review budget requests and manage debt issuance to maintain market credibility, while expressing the expectation that the central bank will steer policy appropriately to achieve a stable 2% inflation target.
Meanwhile, the USD/JPY pair faces downward pressure as the US Dollar (USD) holds losses despite the potential for further Federal Reserve policy tightening. The Fed recently raised the federal funds rate by 25 basis points to a target range of 3.75% to 4.00%, marking its first rate increase in three years and aligning with market expectations. Policymakers also signaled that another hike remains possible before the end of the year.
Source: FX Street