Daily Market Report
09/16/2026
EUR/USD ranged in the mid 1.15s overnight. The Euro (EUR) trades subduedly at around 1.1535 against the US Dollar (USD) during the European trading session on Wednesday. The major currency pair trades cautiously ahead of the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT.
The CME FedWatch tool shows that the odds of the Fed hiking interest rates by 25 basis points (bps) to 3.75%-4.00% at the policy meeting later in the day are 92.5%.
This suggests that the Fed will break its five-meeting hold streak and kick-off the monetary tightening cycle.
With the Fed looking almost certain to tighten monetary conditions, market reaction would be majorly influenced by the monetary policy statement and Chairman Kevin Warsh’s remarks on inflation and the economic outlook.
In the policy meeting, investors will also focus on Fed’s dot plot, which shows where policymakers see interest rates heading in the near term.
According to the CME FedWatch tool there is an almost 79% chance that the Fed will deliver at least two interest rate hikes by the year-end.
On the Eurozone front, European Central Bank (ECB) officials have signaled that inflationary pressures could remain higher and prompt the need of more interest rate hikes this year. Last week, the ECB raised its policy rates by 25 bps, as expected.
The GBP/USD pair attracts fresh sellers following an intraday uptick to the 1.3500 neighborhood and drops to the lower end of its daily range during the first half of the European session on Wednesday. Spot prices currently trade around the 1.3470-1.3465 region, just above a one-month low touched on Tuesday, as traders keenly await the outcome of a two-day FOMC meeting.
Heading into the key central bank event, growing acceptance that the US Federal Reserve (Fed) will stick to its hawkish stance amid oil-driven inflation risks and elevated US bond yields acts as a tailwind for the US Dollar (USD). Apart from this, escalating tensions in the Middle East underpin the safe-haven buck, capping the GBP/USD pair, which fails to benefit from the expected rise in UK consumer inflation.
The Japanese Yen (JPY) turns flat against the US Dollar (USD) at around 155.00 in the European trading session on Wednesday after recovering its early losses. The USD/JPY pair is expected to trade cautiously, with market participants awaiting the Federal Reserve’s (Fed) monetary policy decision at 18:00 GMT.
On the Tokyo front, investors keenly await the Bank of Japan’s policy decision on Friday. The BoJ is highly anticipated to hike interest rates by 25 bps to 1.25%.
Source: FX Street