• AUD/USD -0.8% from Wed 0.7141 high after FOMC delivers hawkish rate hike

• 1st Fed hike in over 3-years, a unanimous decision, FFR target 3.75-4.00%

• Trump says U.S. interest rates should be lower than 1% in garbled messaging

• AUD break below 0.7100 an ominous sign, puts 18-month long uptrend at risk

• Some support near 0.7078 100-DMA & 0.7067 55-DMA, but downside open below

• Broad USD index up 0.7%, 2Y UST yields 4.73% near two-year high

• RBA officials (including Bullock) before parliamentary committee on Fri

• Overnight range 0.7075-0.7141 support 0.6920, resistance 0.72825 0.7661
AUD Weekly 52-WMA


AUD 21/55/100-DMA


DXY Daily 55/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

Bank of America Global Research previews the BoE September rate decision, due on Thursday.

"We expect the MPC to vote 6-3 for a hold with Pill, Greene and Mann voting for a hike as in July. There is a fairly small risk that Lombardelli votes for a hike. In July she said that her vote for a hold was not a close call and policy would need to be adjusted only if there were to be evidence of risks of significant second-round effects, including from persistently higher energy prices. So far there is limited evidence of second-round effects, but she may conclude that higher energy prices can increase those risks, causing her to vote for a hike. But it's not our base case and we see this as a fairly small risk," BofA notes.

"We expect the guidance that "The Committee stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term" to remain unchanged. We expect the tone to shift more hawkish vs. July, highlighting greater upside inflation risks than before and the door kept open to a hike," BofA adds.

• Fed hikes rates in search of 'timelier' drop in inflation

• Fed sees more tightening ahead

• Dollar Index rises to 5-week high

• Traders see an 80% chance of BOJ hiking rates on Friday

• Bitcoin steady after sharp fall on Tuesday

(Updates to U.S. afternoon)

By Saqib Iqbal Ahmed

NEW YORK, Sept 16 (Reuters) - The dollar rose against a basket of currencies on Wednesday after the Federal Reserve raised interest rates and flagged further increases in borrowing costs in coming months.

The Fed lifted the benchmark interest rate to the 3.75%-4.00% range, with new U.S. central bank chief Kevin Warsh joining a unanimous decision that effectively acknowledges the Trump administration's inability so far to control inflation.

New policy projections showed 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by the end of this year, with only two of them seeing rates remaining stable from here. Warsh apparently again did not submit a rate projection.

The Fed's new policy statement and economic projections show a central bank opening the door to tighter monetary policy through next year, with the policy rate rising to the 4.00%-4.25% range by the end of this year and ending 2027 at the same level.

"Today’s decisive hike—supported by all FOMC members and paired with an upgrade in the 'dot plot' summary of economic projections—should go a long way toward restoring confidence in the Fed’s commitment to fighting inflation, and help remove a major headwind keeping the dollar restrained," said Karl Schamotta, chief market strategist at Corpay in Toronto.

The dollar index , which measures the currency against major peers, was up 0.3% at 99.961, the highest in nearly five weeks.

"Today's unanimous vote is the clearest signal yet that the Warsh Fed is unified, data-driven, and willing to act," said David Krakauer, vice president of portfolio management at Mercer Advisors in San Diego.

The euro was 0.3% lower at $1.1502. Sterling fell 0.5% to $1.34155. British inflation accelerated to a five-month high in August, a day before the Bank of England is expected to leave rates steady. [GBP/]

YEN TEST

The dollar rose 0.3% against the yen to 155.49 yen.

The yen, which started September strong on a hawkish shift in expectations for Japanese interest rates, joint intervention by Japan and the U.S., and speculation that Japanese investors are repatriating capital, has floundered in recent sessions as the dollar has firmed.

Traders see an 80% chance that the Bank of Japan will hike rates on Friday, LSEG data show, and have priced in two 25-basis-point hikes by the end of January.

"The yen's path will continue to depend heavily on interest rate differentials," David A. Meier, economist at Julius Baer, said in a research note.

"We recently revised our USD/JPY forecasts to 155, reflecting some scepticism that the central bank can ultimately satisfy the pace of tightening currently priced in by markets," he added.

A long rally in China's yuan has lost momentum at around 6.71 to the dollar, but the currency is holding its gains despite a widening gap between low Chinese yields and rates elsewhere. [CNY/]

In cryptocurrencies, bitcoin was little changed at $75,809, a day after tumbling 4% when the U.S. Senate did not advance comprehensive cryptocurrency legislation — a setback to digital asset companies.

(Reporting by Saqib Iqbal Ahmed and Samuel Indyk; Additional reporting by Laura Matthews and Tom Westbrook; Editing by Clarence Fernandez, Christian Schmollinger, Diti Pujara, Rod Nickel and Aurora Ellis)

((; @SaqibReports; +1 332 219 1971; Reuters Messaging: rm:///))

• GBP$ extends slide after Fed exp'd 25bp hike, -0.47% at 1.3413, NY range 1.3473-1.3413

• Fed hikes 25bp as expected to try and tame persistent inflation; oil remains above $100/bbl

• 12 of 18 Fed members see 1-more 25bp hike in 2026, 4 see 2 hikes, 2 see no hikes

• Other DM economies on hawkish tack, BoE exp'd on hold Thursday, BoJ seen hiking Friday

• Despite near-term Fed-BoE divergence, rates to be back in sync by YE 2026 & in 2027

• BoE up next, STIR futures indicate a hold in Sept, 80% odds for a 25bp hike in early-Nov

• UK 10-yr gilt yield off 5.44% high, currently 5.3%, still elevated ahead of Oct autumn budget

• GBP$ supt 1.3413 post-hike low, 1.3407 50% Fib of 1.3140-1.3675, 1.3334 Jul 30 low

• Res 1.3443 daily cloud top (fmr supt), 1.3455 the 200-DMA, 1.3511 falling 10-DMA

GBP Chart:

(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

(Corrects line 7 to read Pair's hold below 10- & 21-DMAs helped reinforce the bearish tech signals)

• AUD/USD opened NY near 0.7130, traded a tight 0.7124-0.7136 range ahead of the Fed

• Pair traded near flat as gold, silver, stocks rallied & US yields , USD/CNH fell

• USD, US yields, USD/CNH rallied after the Fed's hike & latest SEP projections

• Gold, silver and equities eroded some gains which helped underpin the USD

• AUD/USD fell toward 0.7115, traded down -0.23% shortly after the decision

• Techs lean bearish; RSIs indicate bear momentum, monthly inverted hammer in place

• Pair's hold below 10- & 21-DMAs helped reinforce the bearish tech signals
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• USD/CHF is pressing into key resistance around 0.8170–0.8200 ahead of the Fed decision

• Broadly speaking, how the Fed decision unfolds will dictate the near-term direction

• With a hike fully priced, the bar for a further hawkish surprise is high, leaving USD/CHF vulnerable to a pullback

• A hold would represent the clearest downside risk for USD/CHF

• As seen following the Treasury buyback surprise, CHF would likely be among the primary beneficiaries

• In that scenario, renewed focus on the debasement trade could put broader pressure on the USD

• A hawkish hike could push USD/CHF through the 0.8170-0.8200 zone and onto fresh 1-year highs

• 100-week MA at 0.8223. Sustained move above here would open up 0.8350-75

• Related comment: Fed hiking cycles and the dollar
USDCHF daily chart

Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

EUR/USD has been on a downward trajectory since September 9, as markets priced in an anticipated Fed rate increase while simultaneously raising the odds of further hikes to come—a dynamic that poses risk to traders betting on a sustained decline in the pair.

The currency pair has fallen nearly 1.6% from its August high, driven largely by a sharp rally in oil prices that has stoked fears of resurgent inflation. This oil-driven surge has fed through to U.S. short-term rates and Treasury yields , which have climbed as investors anticipate the energy rally spilling over into broader price pressures across the economy.

However, inflation-sensitive markets have told a different story.

Inflation breakevens and inflation-linked swap rates have risen modestly since late July and early August, but without the intensity seen in nominal rates. Notably, U.S. 2-year , 5-year , and 10-year

inflation swaps have recently pulled back from their rally, as have shorter-dated breakevens —and crucially, none of these measures have broken out of the ranges they've held for the past two years.

This divergence suggests that traders expecting the Fed to adopt an aggressively hawkish tone and signal additional hikes beyond today's meeting may end up disappointed.

Should that scenario play out, the dollar and U.S. rates could face downward pressure, opening the door for EUR/USD to see increased upside risk rather than the continued weakness bears are anticipating.
usinfswp


usbei


eurusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

The following are brief expectations for today's September FOMC as compiled from the related notes of 10 banks.

Out of the 10 banks projections, 2 banks (Credit Agricole, and Standard Chartered) expect the Fed to remain on hold, while 8 banks expect a 25bp hike at today's meeting. 

Danske: We revise our call for Wednesday's FOMC meeting and now expect a 25bp rate hike. We maintain our forecast for 25bp increases at both the December and March meetings, taking the Fed Funds rate to 4.25-4.50% towards the end of 2027 (prior: 4.00-4.25%).

CIBC: The Fed simply can’t wait on the sidelines, and it’s not because core CPI was one tick higher than expected. Failing to at least begin nudging the fed funds rate higher would raise two risks that exceed the risks to the economy from a higher policy rate.

Standard Chartered: We continue to expect the FOMC to hold policy rates on 16 September...An unneeded hike will have a reputational impact if data suggest inflation pressures are diminishing.

Bank of America: The Fed is now widely expected to hike Wednesday by 25bps. Sept FOMC communications likely lean hawkish. SEP will show 50bps of total hikes in '26, Waller may dovish dissent.

Credit Agricole: The Fed’s September rate decision is a very close call, as we see the upcoming FOMC meeting as a truly live one. Even if we have some sympathy for the arguments in favour of a hike, we continue to lean towards the Fed staying on hold once again.

Goldman Sachs: We added a 25bp rate hike at this week's September FOMC meeting to our forecast last Friday following the August CPI report. We continue to expect two cuts in 2027 but now expect them in September and December (vs. June and December previously). 

MUFG: The Fed is now expected to begin hiking rates today after last week’s disappointing US inflation data showed a lack of progress for underlying inflation back towards the Fed’s target. Additionally, the Fed is under pressure to begin hiking rates today to back up their inflation fighting credibility under new Chair Kevin Warsh.

ING: Markets are fully expecting a 25bp hike to 4.0% today, and a surprise hold or strong dovish dissent could have a materially negative impact on the dollar. But that’s a small risk, as the FOMC is likely mindful of any adverse Treasury-market implications. Openness to further hikes by Warsh can leave the dollar broadly supported.

UniCredit: A rate hike (our baseline) should be largely neutral for USTs as markets already discount a bit more than three hikes. If the Fed leaves rates unchanged, we see a clear risk of the long-end selling off as investors factor in a higher inflation risk premium, while yields at the short end could decline.

SEB: We change our forecast to a 25 bp hike after the higher-than-expected August CPI. The large emphasis that the Fed has put on this data makes it very hard for them to credibly abstain from a hike. Still, uncertainty is unusually high.

• Cable hits 1.3458 after falling further from 1.3493 (pre-UK CPI data high)

• 1.3458 is the lowest level since August 7 (1.3455 is 200DMA)

• Dollar stronger before likely rate hike from the Fed at 1800 GMT

• Ultra-hawkish hike from Fed might depress GBP/USD towards 1.3400

• Bank of England rate hold expected on Thursday, at 1100 GMT

• U.S. August retail sales data due at 1230 GMT; up 0.8% expected

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• Cable hits 1.3466 after extending south from 1.3493 (pre-UK CPI data high)

• 1.3466 is two pips shy of Monday's five-week low (1.3455 is 200DMA)

• UK CPI rose to 3.1%, as expected; BoE rate hold still expected on Thursday

• Warsh's words may matter more than the anticipated Fed rate hike today

• Fed rate decision at 1800 GMT; Warsh briefing starts at 1830 GMT

• U.S. August retail sales data due at 1230 GMT; up 0.8% MM forecast

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

Sept 16 (Reuters) - The euro has been trading with a sideways bias versus the dollar since June 2025. So, what will it take to shake EUR/USD from its range?

Several established drivers could yet trigger a more sustained directional move for EUR/USD, away from the 1.1325–1.2084 range according to EBS prices.

Interest rate differentials remain the most direct lever. The ECB has turned more hawkish, with policymakers saying tighter monetary policy may be required to contain inflation that's stuck above 3%, and officials expecting to raise interest rates further, with another increase possible as soon as next month. The Fed, by contrast, has held steady for most of the year, keeping the benchmark rate at a target range of 3.50% to 3.75%. That said, rate-hike bets have recently increased for this week's meeting, with FedWatch predicting a 66% chance the Federal Open Market Committee will hike by a quarter-point at its upcoming Wednesday meeting.

A break above 1.2084 would likely need the Fed to pivot toward cuts while the ECB holds firm — narrowing the real-yield gap. A break below 1.1325 would require the opposite: renewed Fed hikes or ECB capitulation. Much could depend on the message late in Wednesday's session. Chair Warsh has been notably tight-lipped on forward guidance, having been adamant about not providing markets with forward guidance, preferring that officials have a "good family fight" over the data at FOMC meetings. If Warsh surprises with no hike, or maintains this opacity even after a hike, the dollar could come under pressure.

Growth divergence is the second pillar. Eurozone growth has surprised higher, with ECB staff projecting growth of 0.9% for 2026 and 1.4% for 2027, an upward revision reflecting the resilience of the euro area economy. Meanwhile, U.S. GDP growth has decelerated to 1.5% quarter-over-quarter, even as core inflation stays sticky. A widening or narrowing of this gap could force EUR/USD outside its range.

U.S. fiscal policy is a structural wild card — large shifts in Treasury issuance, fiscal expansion, or foreign reserve diversification could weigh on the dollar independent of the rate cycle, potentially overriding rate differentials entirely.

Finally, geopolitical shocks tied to energy remain central. The ECB has noted the war in the Middle East is generating inflation pressures, with implications depending on the intensity and duration of the energy shock. A major escalation could pressure EUR/USD lower; a resolution could unlock a move higher.
EUR/USD monthly chart:

(Peter Stoneham is a Reuters market analyst. The views expressed are his own)

• Overnight (Thursday) expiry EUR/USD implied volatility warns of Fed induced volatility but not excessive

• Broader EUR/USD implied volatility trades near long term lows - benchmark 1-month expiry just 4.9

• Risk reversals show barely any directional volatility risk premium - 1-3-month just 0.15-0.1 EUR puts over calls

• Trade flow remains tepid and lacks any real directional bias - strikes mostly within 1.1400-1.1700 range

• Huge strike expiries in the 1.1500-1.1600 zone this week are tightening grip on current EUR/USD range

• Related comment - EUR/USD: What FX options say ahead of the Fed meeting
EUR/USD FXO implied volatility


EUR/USD 25 delta risk reversals

(Richard Pace is a Reuters market analyst. The views expressed are his own)

• Large 0.7130 option expiry anchors AUD/USD ahead of Fed event risk

• The size of the strike for the New York cut at 1400 GMT is A$1.3 billion

• Fed looks likely to raise its policy rate by 25 bps to 3.75-4.0% at 1800 GMT

• Ultra-hawkish Fed hike might depress AUD/USD through 0.7100

• 0.71085 was Monday's base; lowest level since August 20

• Next RBA rate decision on Sept 29: quarter-point hike to 4.6% looks likely

AUDUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• XAU/USD up 0.75% in Asia ahead of crucial Fed rate decision later Wednesday

• Probability of a Sep hike at 92%; FOMC statement and Warsh presser key

• Gold downside limited as hawkish Fed outlook largely priced in

• Officials may be reluctant to commit to additional tightening beyond Sep

• May disappoint hawkish investors who have priced in 3 rate hikes by March

• XAU has built strong base at $4250-$4260; rally to $4,400, $4,430 likely

• Asia range $4274.74-$ 4,340.73
XAU:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• Shares of Australia's Pantoro Gold jump as much as 11.1% to A$2.865, marking their biggest intraday gain since August 26

• Stock hits its highest level since September 7

• Gold producer reports high-grade drilling results from Racetrack gold discovery at its Norseman project in Western Australia, extending mineralisations to nearly 900 metres

• YTD, stock down 42.2%, including the day's moves

(Reporting by Paridhi Minda in Bengaluru)

• GBP/USD steady as markets brace for crucial Fed rate decision later Wed

• Probability of a Sep hike at 92%; FOMC statement and Warsh presser key

• Hawkish Fed outlook priced in, USD upside likely limited

• UK August inflation data due Wed; BoE expected to hold rates on Thursday

• UK food price inflation could hit nearly 7% in 2027- industry researcher

• Resistance 1.3535, 1.3560; support 1.3465-70, 1.3444-54, the 100 & 200-DMAs

• Tuesday range 1.34645-1.3501, Asia 1.3466-1.34805
GBP:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• Shares of Australia's Auric Mining rise as much as 8.7% to A$0.250, marking their biggest intraday pct gain since September 9

• Stock hits its highest level in a week

• Gold explorer says it has acquired key processing plant infrastructure for its Burbanks gold project for A$1.2 million ($854,640.00)

• The purchase includes crushing, material handling and milling equipment needed for the initial 600ktpa processing plant design

• Co says the acquisition keeps development studies on track for restarting the Burbanks processing plant in Q1 2028

• YTD, stock down 10.9%

($1 = 1.4041 Australian dollars)

(Reporting by Paridhi Minda in Bengaluru)

• AUD/USD -0.1% Wed as Fed looks set to hike FFR for 1st-time since Jul 2023

• Broad USD index +0.1%, and UST yields remain elevated across the curve

• Saudi Arabia cancels shipments in wake of pipeline damage, WTI $105 a barrel

• AUD drifts listlessly pre-Fed, chance of fall toward 0.7080 100-DMA rising

• RBA officials (including Bullock) before parliamentary committee on Fri

• Range Asia 0.7121-315 support 0.7080 0.6920, resistance 0.72825 0.7661
AUD Daily 21/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• USD/JPY has broken back above 155.00, yesterday 154.22 to 155.25 EBS

• Asia so far this morning 155.03-43 and looking better bid for now

• Higher US rates with Treasury 10s above 5.0%, likely Fed hike cited

• Higher crude oil prices on Middle East conflict escalation boost to USD too

• USD/JPY highest since 156.30 on September 7, some resistance ahead at 156.00

• USD/JPY now well above 154.13-33 hourly Ichimoku cloud

• Hourly Ichimoku kijun 154.82 ahead, 200-HMA 154.20 below

• Nearby option expiries today include 155.00-01 $1.6 bln, 155.50-65 $699 mln

• Also 154.90 $584 mln below, 156.00 $641 mln above

• JGB-US Treasury rate differentials wider, in 2s @282, 10s @199 bps

• Related comments , , ,

• And , also , on Fed

• US markets , , ,

• On Middle East conflict , for more click on [FXBUZ]

USD/JPY:


JGB-US Treasury 2-year interest rate differential:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• NZD/USD -0.4% from Tue 0.5781 high, cedes ground ahead of Fed decision Wed

• NZ Q2 current account -1.67 bln quarter (poll -2.57 bln), -14.58 bln annual

• DXY +0.2%, UST yields higher across the curve as Fed hike expectations build

• Saudi Arabia cancels shipments in wake of Houthi attacks, Brent crude +2.7%

• NZD now targeting 0.5627 ytd low, hawkish Fed may prompt move pre-month end

• RBNZ Assistant Governor Angus McGregor due to speak Thur

• Range NZ 0.57566-62, support 0.5755-60 0.5627, resistance 0.5995 0.6012
NZD Daily 21/55/100-DMA


DXY Daily 55/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

Bank of America Global Research discusses the USD outlook into the September FOMC decision on Wednesday.

"There remains considerable two-way risk for the USD at Wednesday's meeting. At the extremes, we see the FOMC-related bull and bear case for the USD as the following:

Bullish USD case: The Fed hikes and some combination of the following are met: 1) The SEP shows broadening support for additional hikes (relative to the June SEP); 2) growth and inflation forecasts are elevated even in the context of further hike guidance; 3) Chair Warsh himself (intentionally or unintentionally) offers some indication that a more prolonged campaign is necessary to return inflation on the path to 2%.

Bearish USD case: Of course, if the Fed opts to hold in the face of sticky inflation and market pricing, we expect the dollar to depreciate swiftly and significantly. But even in the event of a hike, the USD could soften with dovish or non-committal language from Warsh," BofA notes.

Bottom line: Fed expected to hike 25bp. SEP to show 50bps of total hikes in '26. Fed choice is simple: hike or bond spike. Warsh likely to deliver hawkish hike, which should support higher front end rates & twist flattening of UST curve. USD outcome will be determined by Fed ability to "out-hawk" market expectations & other G10 central banks.

• AUD/USD +0.2% from Tue 0.71171 low in subdued trading as FOMC outcome looms

• Futures pricing implies 93.2% chance of FFR hike Wed, DXY & UST yields firm

• WTI +4.0% to $105.48 a barrel as Saudi Arabia starts cancelling EU shipments

• AUD rangebound pre-Fed, but eventual drift toward 0.7080 100-DMA likely

• RBA officials (including Bullock) before parliamentary committee on Fri

• Overnight range 0.71173-34 support 0.7080 0.6920, resistance 0.72825 0.7661
AUD Daily 21/55/100-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• EUR/USD eased within narorw 1.1527-52 range as surge in oil lifts dollar, yields

• Losses are cushioned by haven-related dip buying ahead of large 1.1500 option expiries this week.

• Upside is capped by the 100-DMA at 1.1554, while the 55-DMA at 1.1522 provides support.

• Volatility remains subdued ahead of Wednesday's Fed decision, where a 25 bp rate hike is expected

• A break beyond the 1.14-1.16 range is needed to generate momentum

• ECB's Moulin: higher yields reflect increased debt issuance and rising inflation expectations

• German Chancellor Friedrich Merz canceled NY trip due after electoral setbacks
EUR

(Robert Fullem is a Reuters market analyst. The views expressed are his own.)

• GBP$ soft in NY afternoon, -0.14% at 1.3478; NorAm range 1.3497-1.3471

• Pair hovers near trend low ahead of Wednesday's expected Fed 25bp hike

• BoE seen on hold on Thursday; LSEG's IRPR indicates +9bp (36% odds) by BoE

• Further out the curve, BoE policy seen slightly above the Fed may stall declines

• Fiscal concerns remain a key focus of cable traders as 10-yr gilts trade at 19-yr highs

• GBP$ supt 1.3464 Mon/Tues lows, 1.3443 flat 100-DMA, 1.3407 50% of 1.3140-1.3675

• Res 1.3500 big-figure resistance, 1.3517 the falling 10-DMA, 1.3566 daily high Sept 9

GBP$ Chart:

(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)