Forex · 18 September 2026
Euro Under Pressure as BoJ Delivers Surprise Hike to 31-Year High
EUR/USD slips toward 1.1480 after Bank of Japan raises rates to 1.25%; calendar quiet ahead with no scheduled data releases this week.
Ultimo Research
The Bank of Japan raised its policy rate by 25 basis points to 1.25%, the highest level since 1995, catching some traders off guard with the quickening pace of its hiking cycle—the rise taking place three months from the BOJ's last hike. The BOJ said the move was because of a risk that inflation will deviate upward to beyond its 2% target. The decision weighed on dollar-yen while sending ripples across majors including EUR/USD.
The EUR/USD exchange rate rose to 1.1480 on September 17, though the chart shows considerable weakness from early September when the pair was trading near 1.1640. The Federal Reserve raised its benchmark interest rate by 25 basis points to a target range of 3.75%-4%, its first increase since 2023, adding support to the greenback. The ECB raised its main interest rates by 0.25 of a percentage point on September 10, with the deposit rate increased from 2.25% to 2.5%, citing Middle East tensions and oil-driven inflation pressures.
What the calendar says
The economic calendar shows one item this week: the Bank of Japan policy decision listed for September 18, 2026 (time not fixed). That decision has now been delivered—the 25 basis point hike to 1.25% discussed above—and no further scheduled central-bank meetings or macro releases appear on the docket for the remainder of the week. Traders looking for directional catalysts will need to rely on headlines rather than the data flow.
EUR/USD: testing support near multi-week lows
The hourly chart displays EUR/USD consolidating just above 1.1480 after a steep descent from the 1.1647 high printed on September 9. The 200-day moving average, cited by multiple technical desks as sitting near 1.1545, lies overhead and has capped two rally attempts. Immediate support rests at 1.1460, visible on the left-hand side of the chart; a break there opens 1.1323, the August low referenced in technical commentary. Resistance is stacked at 1.1545 (the 200-day EMA) and 1.1600. The Fed's shift back to tightening and the ECB's cautious language both favour range-bound or lower trade unless geopolitical headlines shift the energy picture.
USD/JPY: volatility after the surprise
The BoJ's move to 1.25% injects fresh uncertainty into USD/JPY. The decision was split 7-2, with board members Toichiro Asada and Ayano Sato dissenting from the hike, underscoring divided views within the Policy Board. With the Fed now at 3.75%-4% and the BoJ at 1.25%, the nominal differential still favours dollar longs, but the pace of BoJ normalisation will determine how long that support lasts. Watch 155.00 and 157.50 as near-term pivots; a sustained break below 155.00 would signal a broader reversal in yen strength.
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